The 3Dimensional Trading Breakthrough

Brian Schad
81.00, then the 10-day moving average between day #2 and day #11 would now
be 76½.
Let’s see…so far we have 75.5 and 76.5 – what comes next? Well, we need at least
THREE DAYS / Units of Time in my book in order to determine a likely direction,
or trend, of whatever it is we’re examining for decision making purposes. Let’s
continue with following price for a 12 th day…
On the twelfth day the market closed at 82.00, so we drop off the price of 72.00
11 days ago and now include day #3’s price of 73.00 and add them all up one-byone
to today’s last price of 82.00…and the average price of the last 10 days is now
“77.5.” Do you now see the pattern here? …75.5, 76.5, 77.5: It looks to me that
the moving average is climbing, and this continuing of climbing moving average
prices indicates the trend of the market is UP.
This method of determining a moving average can effectively be applied not only
to days, but weeks, months, quarterly, years, and even hourly – any standard of
time! Let’s use “weeks” from this point forward – specifically the 10-week moving
average.
Be aware on the daily charts a measurement of one week in time is actually FIVE
DAYS of trading. Thus, a 50-day moving average is synonymous with a “10-week”
moving average. Easy enough…? Let’s go forward from here…
If the 10-week moving average is trending higher, I will take ONLY “long” trades.
If the 10-week moving average is trending lower, I will ONLY take trades to the
“short” side. Another popular variation of this simple observation is if the market
is trading ABOVE the 10-week moving average, be on the buy-side of the market.
If the market is trading BELOW the 10-week moving average, then of course look
to be a short-seller. If, in the course of the trade, the 10-week moving average
were to change direction on me, my recourse of action would be to simply look
to offset/reverse my position. Keep this in mind as we evaluate more charts
throughout this material.
In the business of futures trading, I want to keep the decision making to a minimum.
I let the indicators that can be relied upon make the decisions for me. My ONLY
responsibility is to CALL MY BROKER to manage my trades (These days, after 11
years of the same ol’ thing, I email my brokers my instructions the night before
– and catch the most beautiful trout the Southern Fork of the Snake River has to
offer the next morning.)!
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