Breathing Life into a Trade that’s Flirting with Death

It couldn’t have looked worse. The front of the car was folded in like an accordion and the driver was slumped over in his seat. There isn’t time for small talk – seconds and minutes could mean the difference between life and death.

Such is the predicament if you find yourself on the scene of an accident. Being able to establish the vitals of the injured and then monitor them is critical if you’re going to provide the care needed to keep them alive until first responders arrive. Yet, if you’re like many, you have no idea what to look for – especially in the heat of the moment.

The same is true for retail traders when looking at a swinging bar during volatile market sessions. Understanding how to monitor bar behavior as an auction unfolds is often the difference between permanent injuries to your account or healthy trades that last.

Critical market vitals that most traders miss

George Woods found himself in the situation we all dread. He came upon a car accident to find a dying man. Thankfully he was able to revive the crash victim, bringing him back to life just as first responders arrived. Fortunately, the Ohio High School Athletic Association requires CPR training if you’re going to have a coaching permit.

Unfortunately, millions of retail traders find their way into the market without any knowledge of how to revive a dying trade – let alone how to read its vital signs. This is mostly due to the fact that they simply can’t see the vitals of each bar as they develop. By the time they make their move, it’s simply too late.

Worse yet, if they’re leaning on a lagging, price-based indicator – they often find themselves on the wrong side of a market move. While they pour over their charts hoping for a red or green arrow to point the way – their profits are slipping away.

Little do they know that their entries and exits can be saved, by looking at the real-time vitals of buyers and sellers as they develop.

The difference between trades that profit or pass

When Woods arrived on the scene, someone was attempting to administer CPR. When he asked the well-intentioned helper if he knew what he was doing – the response was a swift and honest: ‘No’. Woods jumped in and found that two of the vitals were absent when evaluating a victim – no sign of a pulse or breathing.

95% of retail traders attempt to manage, or even revive, their trades without any visibility to a bar’s equivalent of pulse or breathing.

A bar’s pulse can be found in the COT (Commitment of Trader). This is the price level where the most volume is taking place – and is unknown to most traders. Essentially, most traders are staring at a bar without knowing exactly where the heartbeat is or how strong it is. Furthermore, the breathing – or aggressive moves between buyers and sellers driving the price action – is completely hidden with traditional charts.

Using Order Flow Sequence Tracking, each of these vital signs – pulse and breathing levels – can be actively monitored in real time. This information tells you exactly who’s in control and reveals the ideal conditions for entry and exit.

Without this information, you’ll be left to guess – essentially sealing your trade’s fate before even making an entry.

Revive your entries and exits for consistent profits

It was after three to four minutes of administering CPR before the victim started to come around. As luck had it, it was a pure coincidence that Woods happened to be passing by the scene. The helpless victim recovered to the point where he could be charged by police for driving under the influence.

Monitor each bar's vitals to revive your entry and exits!

Your trades have a much brighter outlook. Using Order Flow Sequence Tracking, first check the position of the pulse. A COT at the bottom third of a red/down bar – you may have a reversal coming from the buyers. Conversely, a COT at the top of a green/up bar shows that the sellers like the price and could be helping drive the price back down.

Comparing the pulse to the breathing, or the activity between the buyers and sellers, will show you who’s about to take control. Watch the tips of the bar, looking for responsive activity and stacked imbalances. If these conditions surface on the opposing side of the bar movement – the competing buyers (or sellers) are stepping in.

Increased support activity in the form of a COT in the middle of a bar, and imbalances on the driving side, will tell you both the pulse and the breathing are strong. The bar is getting ready to go on a run and a trend may be ensuing.

Why ignoring market vitals will tank your account

Some argue that CPR only works on TV. According to the American Heart Association – if bystander CPR is not provided, a sudden cardiac arrest victim’s chances of survival fall 7 percent to 10 percent for every minute of delay.

Retail traders who believe they can beat the odds of a market driven by institutional traders – who can see a bar’s vitals – sit in a similar boat. With every minute that passes with their trade – the odds of survival or profit diminish dramatically.

Being able to monitor market vitals as they unfold is the difference between getting in early or moving too late – a problem that plagues 95% of retail traders. Better to be in a position to administer CPR by knowing where the COT is and what exactly is going on with institutional buying/selling forces.

Taking on the institutions without it puts your trades in front of a Mack truck with no hope of survival.

Beat the odds most retail traders face

According to the American Heart Association, approximately 95 percent of sudden cardiac arrest victims die before reaching the hospital. This doesn’t have to be an inevitability – if more people knew CPR, more lives could be saved. This starts by knowing how to read the vitals of the victim.

You can avoid putting your account in a similar position by monitoring the vitals of each bar. Instead of jumping to a conclusion in the early stages, let the bar develop. Monitor the position of the COT, delta and imbalances as they unfold.

Let the bar unfold into the last third of your selected time frame – using the countdown tool if needed. Should you have a reversal indication, let the next bar start to confirm price is headed in the direction of your desired entry.

Make your move based on the established direction and vitals of your bar. Keep your account alive and enter a trade that lives to see its target.

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