When I had a chance to meet Jack Schwager several years ago, I told him that I read Market Wizards more than 25 times over my life. Schwager was clearly impressed at my dedication to his tome, but the truth of the matter is that I have never been able to put the ideas of Market Wizards to much use in my own trading.

Until now.

I hadn’t read Market Wizards in more than five years, but over the Christmas vacation a vague recollection of quote from Larry Hite popped into my head and took my scalping to a whole new level. Larry Hite is one of the legendary traders profiled by Schwager who generated 30% annual returns for 13 years running before retiring in 1993. This is what he said, "When a market makes a historic high, it is telling you something. No matter how many people tell you why the market shouldn’t be that high, or why nothing has changed, the mere fact that the price is at a new high tells you something has changed."

As I scanned hundreds of intra-day charts over my vacation, I realized that Larry's observation was just as applicable on a short-term basis as it was on a longer-term time frame. Granted, the session breakouts that I looked at often had minuscule follow-through, and you had to be very disciplined in both your entries and exits in order to take proper advantage of the price action, but the underlying idea remained valid. New highs and new lows are telling us something, even if on occasion we do not want to hear it.

How many times have we seen a currency pair trade opposite to the just released fundamental news often taking out the days' highs or lows and continuing on its merry way? On those occasions, something else is going on in the market that we may not necessarily understand but must respect. Often the true story surfaces several hours later, but by that time the bulk of the move is done

One of the greatest ironies of trading is that as human beings, we are naturally averse to "chasing tops or bottoms" when in reality they provide us with some of the highest probability entries in the game. My intra-day scalping improved immeasurably ever since I took Larry Hite’s observation to heart and I can finally say that after 25 readings of Market Wizards I finally learned something.

Boris Schlossberg serves as director of currency research at GFT, and runs bktraderfx.com.