How tramline kisses give your trading an edge – part II

John C Burford explains why swing traders should always be on the look-out for a 'scalded-cat bounce'.

On Monday, I explained that in my tramline trading system, the tramline kiss is a very important chart pattern that I use for low-risk trade entries. I gave four examples showing how to find them and how to trade them.

The key feature of a genuine kiss is this: after the kiss, the market usually moves swiftly away from the line in what I call a scalded-cat bounce. I call it that in homage to the well-known phrase dead cat bounce', which describes a market that has fallen hard and then stages a small relief rally where short profit-takers dominate trading.

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John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.