IDENTIFYING A BARGAIN DAY

                       After determining a trend bias the next step is to identify a bargain day.
Chapter 3 introduced you to the concept of finding bargain days, and the
Sitcom System uses them to locate days that potentially offer the best deal
on a trade. Traders often jump into trends at a price that doesn’t represent
the best possible value for their trade. This is usually referred to as

chasing a breakout or entering at the top of a rally or selloff. Bargain days

represent an opportunity to join an existing trend at a much cheaper price.

Often these days are referred to as pullback days and are formed when the

market moves against the prevailing trend. The Sitcom System defines a

bargain day as any day that has closed against the prevailing trend.

Figure 6.2 points out several potential bargain days during a downtrend

on the GBP/USD daily chart. Figure 6.3 illustrates a series of bargain days

that occurred during a EUR/USD uptrend in May 2009.

Clearly, bargain days do not guarantee that the trend will continue.

In many cases the pullback continues for two or three days before the

trend continues. You must be judicious in selecting which bargain days

you choose as trading opportunities. Some helpful guidelines are:

• Select bargain days that pull back closer to the moving average.
• Look for corresponding support or resistance that may stop the
• pullback.
• 
  
• Wait for a “double bargain” day, when the market has pulled back two
• days in a row, before entering.
• Look for a 00 price slightly above the high or low of a bargain day.

These are general guidelines to help you gauge the validity of a bargain

day before you enter a trade. Your ability to select the best bargain days

for a Sitcom System trade will come with experience. The more time you

spend with a specific currency pair, the more familiar you will become with

its nuances.