The bloody losses sustained during WWI were attributed to the stationary strategy of trench warfare. An approach designed to protect actually made troops sitting targets.
Using static stops can be the equivalent of parking your trade in a trench, and simply waiting to be wiped out. Something you can’t afford when in battle involving institutional traders.
The COT takes you out of the trench and reveals the exact location of the conflict. Order Flow Sequence Tracking Intelligence will tell you in real time who is prevailing and what position you should take.
The absolute frontline in the battle of price
In the battle of price, it’s the volume that drives the outcome. The COT, or Commitment of Trader, is where the most volume is taking place. The front line.
In conflict between buyers and sellers, this is the focal point within any candle or moment. This isn’t the small-arms fire on the fringes, it’s the target that’s attracting the heavy artillery of the institutions.
Knowing exactly where the fever of price is reaching its pitch allows you to enter the fray with visibility and caution. More importantly, the COT allows you to monitor the activity and lock in profits while minimizing risk.
Trading with static stops is the equivalent of waiting in a trench, oblivious as to whether the enemy is advancing or retreating.
Converting static stops into agile weapons
As troops advanced, reinforcements were maneuvered into positions behind the front line to ideally secure captured territory. With trench warfare, this process was too disconnected and distant from the front line. This often left hard-fought gains on the table and exposed the rear guard to losses.
The COT gives you a point with which to actively manage your reinforcements — or stops — as your trade unfolds. Because the COT serves as a natural point of support and resistance, you have cover with which you can hide your stops.
Instead of holding a static stop that sits miles behind the front line, unresponsive to what’s happening — you can advance to take profits and limit your risk.
Note how the trade to the right unfolds after the entry is made. Using the COT (gray portion of the candle) you’ll see:
• Entry: Way to go! You’ve entered as the VAL (Value Area Low – gold) is challenged, in conjunction with a homework level (blue).
• Move Your Target: Noting where the VAH (Value Area High) is, the target is moved up accordingly.
• Adjust the stop: As the trade unfolds in your direction, the stop is moved up — 2 ticks below the COT — locking in profit already.
• Advance: Further profits are locked in, simply by monitoring the COT and advancing your stop.
By simply managing your trade, using COT as it developed, you were able to protect your profits and keep them in your pocket as the market developed!
More importantly you’ve limited your risk as the trade developed.
Turning guaranteed losses into locked-in profits
Although in battle, troops waiting in trenches became complacent while they waited to respond to an oncoming attack. This, combined with a lack of real visibility of the oncoming force made their position incredibly dangerous.
Just like a supposedly fortified trench, static stops that don’t move with your trade conditions present more of a liability than a safeguard. The danger lies within the very nature of the stop — it’s static.
In a market that’s unfolding with thousands of transactions every second, a stop that’s miles away from the point of conflict (COT) does little to mitigate risk. At the same time, a stop that’s parked too close to your trade that doesn’t move will get clipped before you’re ready.
With Order Flow Sequence Tracking, you’re able to see battle as it unfolds. COT gives your stop a real time position that will benefit and protect your trade the most.
Take advantage of this intelligence and advance your stop, dynamically optimizing your position and immediately converting an otherwise guaranteed loss into a profit.
Now with the prior example, where would your static stop have left you? Like the millions of retail traders out there, you may have been simply waiting — either to be stopped out, or praying for your target to be hit. In this case you would have been fully prepared for the next candle — a reversal.
Instead of waiting, you’re now out in front of your trade — skillfully advancing on your target while managing your risk along the way.
Using Order Flow Sequence Intelligence to keep COT within striking distance
With the COT’s position fluctuating from one candle to the next, it’s logical to ask if parking your stop only two ticks away puts it too close to the action.
By letting COT develop two candles ahead before you advance, you give yourself a chance to verify your advancement, or stay put.
With Order Flow Sequence Tracking, you have a vantage point that retail traders don’t in making this determination. While millions of others lean on lagging indicators and blank candles, you are watching the positions as they are assumed by the institutions. When scouting COT, Order Flow Sequence Tracking pinpoints and marks exactly where — and whether — you should advance your stop.
Whether you advance, retreat or maintain your stop, you have the real-time intelligence needed to make your decision. With each development, you are dynamically managing risk and locking profit.
Profit while everyone else waits in their trenches
The psychological toll for soldiers enduring losses in the trenches was immense. One common response was fatalism — accepting that your destiny was out of your control.
Not so with futures trading. Regardless of what position the institutions may have under siege, you can proactively attack with them using real-time intelligence.
While retail traders unknowingly wait in the deadly trenches of static losses, you’re monitoring the battle in real time.
Use Order Flow Sequence Tracking Intelligence to gauge who is gaining ground and where COT is positioned. When shifts present themselves in the form of sequential declines, especially in conjunction with homework levels, you’ll be ready to move.
As the trade develops, monitor the COT’s position two candles ahead and advance your stop two ticks behind. As you do this, you’ll be locking in profits and managing your risk along the way.
Turn your static stops into an agile fighting force that delivers profits regardless of who’s winning on the frontline.
Noft Traders offers a Funded Trader Program. To learn more, visit their informational page at NOFT-Traders.com.