Of all the maxims cluttering trading and investing, one all traders would do well to keep in mind is, "Simpler is better." We are often tempted by arcane theories and complex indicators because they offer the appearance of intelligence (appearance being the operative word) we often like to wrap around ourselves for protection i.e., it’s complicated, so it must be worthwhile.

Trading is extremely difficult, but that does not mean the basic ideas that drive trades need to be. The following strategy is the essence of simplicity — it looks for price moves of a certain size to indicate swings in the opposite direction but it offers plenty of useful market insights and the potential to develop a workable trading plan.