1/26/12 Chart of the Day

[dc]T[/dc]his chart of Natural Gas futures shows a classic pattern: parabolic acceleration outside the Keltner Channel and the parallel trendline. It is difficult to play a move like this as a fade (i.e., buying for a long) due to potentially unmanageable volatility, but it is always a clear signal to traders positioned on the right side of the trend to tighten stops, perhaps take profits, and avoid shorting into the countertrend pop. In the words of the old Samurai maxim: “after victory, tighten your helmet straps.”

 

AdamHGrimes

Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.