[Anonymous]

Price Action traders in particular can benefit from using the " UP/DOWN and Out" method.

That is, while the trader may have a particular market they trade and a particular timeframe that is favored, he can benefit from looking at higher and lower time frames (the UP/Down) AND other correlated markets (the Out).

This is especially true the more exacting the PRICE ACTION requirements needed to enter a trade.

In the case of the UP/Down the trade would be taken on the timeframe that meets the rule set. In the case of the Out, the trade is taken in the FAVORED market on the same timeframe.

Take a look at the attached chart.

Here a trade is taken on the 15 min because there is a valid High Close Doji pattern that forms at 0915. Yet, if on looks at both the 5 and 10 minute timeframes neither shows a valid bullish dark hammer pattern or bullish white hammer pattern respectively. A trader looking at only the 5 would therefore not enter a trade (assuming that was the only pattern he looked for). Nor would a trader looking at the 10 min.

Now, it is possible that a highly correlated market, like the Swiss Franc, does have a valid pattern on the 5 min at this time (it does not). If that was indeed the case, a sister trade on the 5 min Euro could be opened.

Before you ask, let's take the Dow as an example. If you trade the YM and look for signals in the $indx (or whatever the symbol for cash Dow is) as well, you take the trade in the YM. If for no other reason than most cannot afford to trade the cash index.

Simply, one is basing a trade on the cash index but making the trade in the more affordable futures contract. Nothing here about which leads the other, just using similar markets to broaden the signal universe. This is a better alternative than simply increasing the amount of signals used, and thus possibly diluting the overall Price Action signal strength used. In other words, rather than going from 10 signal types to 20 in order to increase opportunities, you remain with the 10 but look for them in more than just one place.