Introduction

The Trader Guy Next Door equates the alignment of the fluctuation levels of the largest lakes in the world to the fluidity of market movement direction of a traded financial instrument.

The Trader Guy Market Direction Matrix is comprised of the the four largest lakes in the world and the fluctuation levels of each. The bodies of water represent a specific market timeline and the fluctuation level states whether they are rising or falling. The matrix is used to predict the direction of the market and the more aligned they are is the stronger the trade signal. A trader’s intended time in the market drives the number of levels that are required to be aligned for trade triggers to be seen as valid.

How to use

A day trader that is comfortable with staying in the market for a few hours may require Victoria and Huron to be aligned with their trigger whereas one that is in and out in minutes may only require a trigger alignment with the Huron. Back and forward testing should be used to determine the alignment that best fits your trade triggers.

Example

I am a Short-Term trader so if I get a long trigger and the Matrix is as below, I would NOT see the signal as valid.

Water Level	Rising	Falling
Caspian Sea (Long Term)	Y	N
Superior (Medium Term)	Y	N
Victoria (Short Term)	N	Y
Huron (Immediate)	Y	N

However, if the matrix was as follows, I would.

Water Level	Rising	Falling
Caspian Sea (Long Term)	N	Y
Superior (Medium Term)	Y	N
Victoria (Short Term)	Y	N
Huron (Immediate)	Y	N

Caspian Sea is falling but because I am a short term trader, I only care about Victoria and below. A rising Caspian Sea would serve to further confirm but a falling one isn’t enough for me not to take the trade. I would however be more mindful of the potential for a quick reversal and trade manage accordingly.
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