Enthios Economics
Method #2: Jardine Trimesters (“JT”)
Jardine Trimesters (“JT”)
Method #2
The Fundamentals
There are two important observations about the Market Profile™ POC. They are related. The first observation is the logic behind the UNI trade, and the second observation is the logic behind the JT trade. In both cases, the fundamentals are even more important for previously untouched POC’s, which I call “Virgin POC’s” or “VPC:.
- The VPC is strong support/resistance because it represents the a single price point at which the market was most “comfortable” trading on a previous day.
- The VPC is a great price attractor because people will be looking to take profits at the single price point at which the market was most “comfortable” trading on a previous day.
The Logic
Simple law of gravity: the closer prices get to a VPC, the more likely they are going to actually hit the VPC. Why? Because the entire market is looking for obvious places to take a profit. Of course, there are competing “centers of gravity”, for example another VPC on the other side. The Jardine Range shows the closest VPC above, and the closest VPC below, the market open. The Jardine Trimesters divide that range into thirds. Logically, if prices are in the top third, they will be more likely to move up to the VPC above. If prices are in the bottom third, they will be more likely to move to the VPC below. If they are in the middle third, they will be “pulled” equally by both VPC’s and so should not be traded.
The Trade
Trade a move out of the middle trimester, into either the upper or lower trimester – as long as the market has not previously posted prices in that trimester on that day. Example: If the market opens in the middle trimester, you can trade longs out of that trimester and up to the next higher VPC, or shorts ouf of that trimester down to the next lower VPC. If the marked opens in the upper trimester, then you would only consider shorts out of the middle trimester down to the lower VPC.
The Indicators
None. Just a plain 3-minute bar or candlestick chart with knowledge of market structure turning points. Or, your preferred indicators and methods.
Long Trade Entry
As prices move towards the top of the middle trimester, prepare to enter a long trade. If there is sufficient room, you can wait for a MSL long trigger after prices move through the middle trimester. Or you an anticipate the long trade within the middle trimester, as prices move towards the top. Your initial stop will be one tick below the low of the MSL.
Short Trade Entry
As prices move towards the bottom of the middle trimester, prepare to enter a short trade. If there is sufficient room, you can wait for a MSH short trigger after prices move through the middle trimester. Or you an anticipate the short trade within the middle trimester, as prices move towards the bottom. Your initial stop will be one tick above the high of the MSH.
Exiting the Trade
Exit “1/2 at 1/2″, i.e. take profits half way to the VPC target. At that point, move your stop to break-even. Continue to tighten it as MSH’s (for shorts) or MSL’s (for longs) are created.
When you exit the trade at target, you will of course want to turn to your 100-Range chart because the market is now ready to reverse for your UNI trade.
Maximizing the Trade
There are different ways to take your long and short signals. Typically, the earlier you can get in , the higher the profit and the greater the risk.
More on the JT Trade
There’s a lot more on this trade than what you see on this crib sheet. On October 22 I gave a seminar on this topic at the Traders Library conference in Denver. A DVD will soon be available. The topic covers both the UNI method (which is detailed in my most recent book, Just A Trade A Day), and the JT method.
Remember that both methods are complementary and they both rely upon the Market Profile.
JT Chart
This 3-min chart shows two JT trades that occurred on October 27, It also shows, for reference, two UNI trades that occurred on the same day. Note UNI trades are made on a 100-Range chart. To learn more about the UNI trade and to see the those trades from October 27 on a 100R chart (with these JT trades also shown, for reference), please go to the page The Universal (“UNI”).
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