Dec

4

After the market closes I head down to the beach for a surf in the sparkling blue ocean under sunny skies and waving palm trees. Every day the tide is different and as the cycles change, some weeks the high tide at a certain spot is in the afternoon. It is low tide in the afternoon this week. When the tide is too low the rocks stick out and it is too shallow to paddle a surfboard out. So instead of using a surfboard I take out an old bodyboard.

Normally we surfers look down on bodyboarders viewing them as a lower form in the surfing hierarchy. The demands of the changing cycle of tides required a different attack. Using the little plastic body board instead of a fancy surfboard, I went out, and had beautiful sparkling azure glassy waves all to myself, and got wave after wave all day. Well worth the change in tactics. When the tide changes, there is usually a short lull then a surge as the new tide rushes in. The waves get bigger after the turn.

Of course, while relaxing and having fun when out surfing I get market ideas. The changing cycles demand different tools to overcome obstacles and to adapt. Even adopting techniques and tools normally one might look down upon may result in numerous quick and small rides to ones profit when no one else is out. When the tide turns, there is a lull then a surge as the new tide rushes in and waves increase much like last week’s high narrow range, then the top and drop.

Tides and the daily ranges are similar. If we knew in advance what the ranges would be we would soon be rich. The daily and intraday ranges are more regular than random. Even knowing direction alone does not guarantee profits. Homing on the ranges might avoid slop on entry and milk more out of exits. Chair discussed time between big drops or large ranges and trend days. Then there is the clustering issue as today’s drop echoes Monday’s decline. There was last week’s low volatility preceding Monday’s big drop. Early May had narrow ranges as I recall. Thursday had a range with open and close about half way either side. Just as the tides and prices have patterns, ranges may have predictable patterns as well. Knowing when to expect ranges or trends is a big key to effective execution and can be a valuable tool in addition to direction.


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