Odds Enhancers from OTA

I first came across Sam Seiden about 3 years ago in a FX Street webinar and was instantly taken with his way of trading.  I was using lagging indicators for my trading decisions and getting no where.  So I threw off the MACD and CCI and Bollinger bands and I found I could see price action better.  I did keep my moving averages though.  I have also added 3 more indicators, but they are not the typical lagging indicators and you will already have read about them in previous posts.

However, it has taken me quite a while to fully appreciate the significance of these 4 odds enhancers.  I now think about them every time I see a trade lining up and repeat them in my mind.  I have written them out in bold capitals and have it next to my trading PC.

The odds enhancers are

1 - How did price leave the level?
2 - How far did price go?
3 - Do you have a significant profit margin?
4 - How did price return?

For #1, I use my RPM indicator to identify the supply or demand zone, as it measures the speed of price leaving the zone.  So if a see a big bar which is a RPM bar breaking out of a basing zone, then that fulfills this criteria.

For #2, I like to see that price has gone a good distance which leads to #3, giving a profit margin of at least 3:1.

#4 is the second most important after #1 for me as the arival back to the S&D zone can be invalidated by basing just below supply or just above demand.  I like to see a very fast arrival, again with RPM bars and also accompanied by relatively large volume, hopefully shown as climax or climax churn by the Better Volume indicator on the time based chart.  This odds enhancer (#4) was the hardest one to fully appreciate, but it has made a big difference to my trading now that I fully understand it.

You will have read how my supply trade idea for GC yesterday was invalidated as we had basing under the supply zone and then broke out above the basing zone with RPM bars.  This therefore limited #3 and was also a sign that the up move would continue.

There was a very good trade to the long side in the morning when price returned to a demand level with all the requirements I would look for when taking a trade - It came back with climax volume on the 5 min chart and with RPM bars on all charts.

See the 5 min and 400 tick  and 700 volume charts and you will understand #4 better.

I hope you enjoyed this post.  If so, please leave a comment.

Regards, Dudley.