Today’s lesson highlights a series of scalps that I attempted around lunchtime. Ranging days like today tend to be ideal for small-scale fades & divergence plays.

What made today a little different than a normal ranging day was how the NYSE-TICK was spending very little time below the 0-Line (this typically only happens on strong trending days). Since price wasn’t responding in kind, it therefore became quite profitable to use the 0-Line as a guidepost to look for potential market direction changes.

What initially alerted me to this play was that the TICK had fallen under the 0-Line. All I had to do then was wait for a 55-tick TRIX Divergence and go long.

I got just such a signal at A and went long with a stop under the most recent low. Not long afterwards I was stopped out as price continued to drop. But then a second & even more powerful signal showed up & and it earned back all that I lost and more. The converging signals were:

1.) Another 55-Tick TRIX Divergence
2.) 55-TICK Positive Trendline Cross (not the trendline shown here, but visualize one drown from the 798 peak to the 797 peak)
3.) A 610-tick TRIX Divergence in the making (It hadn’t quite turned yet, but was just on the verge)
4.) NYSE-TICK Higher pivot low coming up from below the 0-Line (this was gold)

A key point to keep in mind here is the importance of remaining flexible. After the failure of the initial scalp setup (and a perfectly legitimate trade at that) tt would have been very easy for me to have fallen into the trap of licking my wounds, becoming over-cautious, and thus missed out on the subsequent trade which more than indemnified me from the first loss. Grant it, this kind of flexibility is not always easy to achieve, even for the most experienced of traders, but it still nonetheless necessary.