I have for a long time used an indicator that I called “thrust”, which is just the cumulative volume on up-minutes minus the cumulative volume on down-minutes (as a proxy for the balance of volume). When I first started trading, this indicator seemed helpful, because I always tried to buy a pullback and it seemed to have some power to predict whether a pullback was likely to reverse or continue. But with my present style I do not think it is helpful. It was one of the factors that kept me out of sugar this week, for example, but sugar has now run upwards.

I was using thrust as a measure of how convincing a breakout was, and the sugar breakout was not that convincing, inasmuch as there wasn’t strong volume in the breakout direction through the day. But the point of a breakout is not, I think, that it is a strong sign that the market is going to do anything in particular. The point of a breakout is that it is a signal that forces you into a trend.

Looked at in that way, it was right to stay in soybeans, and it was right to buy into sugar. That is what my trading method should have led me to do. “Breakout was not convincing” is not one of my reasons not to trade. Now I am feeling all the pain of having missed a good trade, which is much worse than having a loser.

But let us not be down-hearted. The latest iteration of my process has only been going since the middle of September, and I am still getting used to it. This latest episode reinforces my conviction that it works. I just need to keep repeating this mantra: “If there is a breakout and there is a trend, you have to trade.”

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