Jeff Cooper’s Hit and Run trading system is still fascinating. Wait for some extraordinary move combined with a higher trading volume and enter the market. Chances are that something is going on there with a lasting effect. A trend may be establishing and you are in.
There is another trading system possible – almost the opposite – the volume jump with following trend system.
If the trend establishes afterwards, a move with potential has been created. Otherwise it may have been only a flash in the pan. It could, of course, also be less than that, namely a market manipulation.
Big pockets do this regularly. They look for some sort of price stability resulting in a trading range and enter it at the lower bounds. Then they drive the price slowly up and, because they added with this operation additional demand, it is now relatively easy to push the price through the upper bound.
A trading signal has been born. If there is also a supporting long-term trend, possibly many traders have waited for this moment and are rushing now into the breakout of the range. That in turn is the point where our manipulator is unloading their position.
Nowadays the markets are full of those false signals. It definitely has to do with this kind of price manipulation. High frequency trading operations are not the ones to blame. It is human manipulation!
Trend trading or investing gets severely harmed by too many stop losses caused by false breakouts! A special trading method is needed…
In the good old days of Nicolas Darvas it was enough to wait for a new high. Darvas later described in his newly revealed secret strategy that in case of a false breakout he had a special method to wait.
So, it looks like markets became more intelligent already fifty years ago. We want to be even more smart and that’s why we turn this trading pattern upside down.
Instead of waiting for the power breakout in a trend, we are looking for a power day, like the hit of Jeff Cooper, but we are not immediately running. Instead we are now waiting, like Darvas with his unknown trading method addendum and then we are entering the forming trend by means of other trading methods.
One thought comes to mind here that most trend traders hate to think. The final entry could be done very well with day trading. Day trading is difficult. You should look for a trading course if you want to learn it. See, you have come to the right place…
And if day trading the long-term trend is really not what fits your bill, perhaps it is the good old but unknown Darvas method in its second edition?