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Trade Strategies: Using Delta for Entry & Exit

Bund 2 July 2018

Attempting to sell through a level can be a frustrating trade as a market continually bounces causing trades at the level to drift offside. So further clues are needed to decide when a break is coming. A candlestick pattern can tell you the level that is likely to break, however timing is needed – this can come from the delta. By looking at whether buyers or sellers are more active coming towards a level, the likelihood of playing a successful break can be increased.

For a break to the downside after a rejection of new highs, a fall in delta as the market approaches the level in question can give an early entry as expectation for a break is increased. Alternatively, selling into the level becomes a more valid trade with such a set up. Once broken, delta can be used to maintain a position and then as a clue to exit depending on how it moves relative to price. If price stalls but delta continues to fall, the move can continue but when delta rises against the move this gives a clue for an exit. These are general principles that can be applied however without the context gained from market structure and a shift in order flow, a move cannot be played.

Where the trade opportunities, based on delta, lay on a Bund move down, are discussed in this live AXIA daily debrief. Staying patient and waiting for the right clue to access a trade not only prevents losing trades but allows a trade to be entered with much greater conviction.

 

 

Technical setups and their related price action are studied during the technical trading sessions and further during pattern development sessions of the Axia Futures 8-week Trader Training Career Programme.

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