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Trading the Moving Target: Volatility

On Ed Seykota’s web site (The Trading Tribe) he was once asked about using index cards with charts. The reader wanted to know how that worked. Ed responded: You can use index cards with charts; use a card to cover up the right side of the graph, and reveal it to yourself one day at a time, …

On Ed Seykota’s web site he was once asked about using index cards with charts. The reader wanted to know how that worked. Ed responded:

You can use index cards with charts; use a card to cover up the right side of the graph, and reveal it to yourself one day at a time, to simulate trading.

Ed’s response inspired us to create a visual example of his wisdom:

Chart Version Number 1.

Chart Version Number 2.

This is a key. As a chart slowly reveals itself think about what the best way to trade it might be. You only get one bar per day. That bar must tell you what to do long before you know what the end of the chart (or trend) will look like.

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