16/9: K7 Setup discussion – Change of Bias

Drilling down into more detail into one of the components of the K7 setup – the bias on an instrument.  Recall the list of setup parameters for a valid K7 setup here.

At what point should one be willing to change the bias on an instrument?

  • The default is to look at the 5M, 15M and 1H charts at the start of the trading session (if executing from the 5M) – at the start of the session I make a judgement whether I am bearish, bullish or neutral.
  • A reversal pattern on a 5M or 15M chart can trigger change in bias – particularly if the pattern takes place around a good price level (KL, round number) – examples of reversal patterns that I personally find most useful: 123, double bottoms/tops, head & shoulders
  • Analysis of EMA’s on 15M – has a XO occurred on 15M? Where are the EMA10 and EMA20 relative to the EMA100 on the 15M?
  • Existence of higher highs, higher lows etc

I feel that yesterday afternoon I was too slow to change my bias to bearish on Cable, and this may have prevented me from getting into short position whilst Cable was steadily trickling down throughout the afternoon.  I need to be more observant as price plots along and be ready/willing to change my bias on an instrument.  That said, I am sure that over-tiredness during the afternoon most likely didn’t help the situation.

Looking at the 15M for Cable for recent sessions illustrates some of these points.

Setups - Bias Change - Cable Sep15

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