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MCDONALD'S 1D RANGE TRADES Ranges are repeatable trading chart patterns. Ranges are consolidation chart patterns that can breakout either direction. Each chart pattern will have defining trendlines of the support/resistance levels creating the pattern. Whatever time frame you are trading this chart pattern, wait for a candle close outside of the trendline in the direction of the breakout candle. (Our time frame preference is the Daily chart). Add volume indicator - Volume is the amount of $ that went into a particular candle or in Forex the # of trades that took place. Add ATR indicator - Volatility is the amount of price movement that occurred. Use the ATR to measure the price movement. When you see descending Volume bars and descending ATR line (which indicates volatility) this shows a dis-interest in traders to invest in this pair creating consolidation which creates the chart pattern. Trade Management after there is a breakout candle close. 1 - Position size (compare volume bar to volume ma line). a - Breakout candle must be 100% of average volume for a full position size. b - If 75% of average volume then ½ position size. (To find 75% of Volume look at the charts volume settings – divide smaller # into larger # = 75%+) 2 - Enter two trades. 3 - SL for both trades will be 1.5 x ATR. 4 - 1st trade TP will be 1 x ATR. 5 - No TP on 2nd trade – letting profit run and adjusting SL to follow price. 6 - When 1st TP hit – move 2nd trade SL to breakeven. 7 - Adjust the 2nd trade SL to follow price. *8 – After Breakout candle – if price closes back into chart pattern close trade *9 - When breakout candle is more than 1 ATR from breakout candle open. a - Enter 1st trade at candle close with ½ position size. b - Enter 2nd trade with a pending limit order that is 1 ATR of breakout candle open. c – Price should pullback to that pending limit order for 2nd trade. d – If Price returns back into chart pattern close trade before SL is hit.
NYSE:MCD
by Tradingstrategyguides
DOW JONES 1D BEAR FLAG SHORT TRADEBear Flag are Ranges that are repeatable trading chart patterns. Bear Flag chart patterns will have a directional bias depending on the previous incoming trend. Each chart pattern will have defining trendlines of the support/resistance levels creating the pattern. What ever time frame you are trading this chart pattern, wait for a candle close outside of the trendline in the direction of the breakout candle. (Our time frame preference is the Daily chart). Add volume indicator - Volume is the amount of $ that went into a particular candle or in Forex the # of trades that took place. Add ATR indicator - Volatility is the amount of price movement that occurred. Use the ATR to measure the price movement. When you see descending Volume bars and descending ATR line (which indicates volatility) this shows a dis-interest in traders to invest in this pair creating consolidation which creates the chart pattern. Trade Management after there is a breakout candle close. 1 - Position size (compare volume bar to volume ma line). a - Breakout candle must be 100% of average volume for a full position size. b - If 75% of average volume then ½ position size. (To find 75% of Volume look at the charts volume settings – divide smaller # into larger # = 75%+) 2 - Enter two trades. 3 - SL for both trades will be 1.5 x ATR. 4 - 1st trade TP will be 1 x ATR. 5 - No TP on 2nd trade – letting profit run and adjusting SL to follow price. 6 - When 1st TP hit – move 2nd trade SL to breakeven. 7 - Adjust the 2nd trade SL to follow price. *8 – After Breakout candle – if price closes back into chart pattern close trade *9 - When breakout candle is more than 1 ATR from breakout candle open. a - Enter 1st trade at candle close with ½ position size. b - Enter 2nd trade with a pending limit order that is 1 ATR of breakout candle open. c – Price should pullback to that pending limit order for 2nd trade. d – If Price returns back into chart pattern close trade before SL is hit.
CBOT_MINI:YM1!Short
by Tradingstrategyguides
1
GBPJPY 1H BEST ATR FOREX TRADING STRATEGY #3QUESTION - WHAT ARE THE BEST FOREX TRADING STRATEGIES. #3 - BEST AVERAGE TRUE RANGE FOREX TRADING STRATEGY Step #1: Make Sure Your Chart Setup Configuration Looks the Same as our Price Chart The Average True Range Trading strategy has a chart configuration with two windows: The first window should contain your favorite currency pair. The second window should contain the ATR indicator with the 20-EMA attached to it (use the above instructions in order to overlay the 20-EMA). Step #2: Wait for ATR Indicator to Break Above 20-EMA A breakout in the ATR indicator reading above the 20-EMA is indicative of higher volatility to come. With higher volatility, this also means trading opportunities and bigger profits to be made. A break of the ATR line above the 20-EMA can be a great proof of a new trend. The Average True Range Trading strategy incorporates not just the ATR volatility readings, but it also looks at the price action to confirm the increase in the ATR volatility. This brings us to the next step of the best average true range Forex strategy. Step #3: Check the Price Chart to Ensure the ATR Breakout is Followed by a Price Breakout After the ATR line broke above the 20-EMA we want this to be followed by a break in price as well. If we’re looking to buy, we want to see a big bullish candle relative to the previous candles popping up on the chart. If the price breaks up and is accompanied by a break higher in volatility, there is a high probability of the market to move in the same direction. Now, all we need to establish is how to enter the trade. If we already have an idea of where the market is most likely to move. This brings us to the next step. Step #4: Enter Long Once We Break Above the High of the Breakout Candle Depending on your preferred time frame, you’ll have to wait until the breakout candle has been developed. Then enter long once the next candle breaks above the high of the breakout candle. This is key to the success of the Average True Range Trading strategy. You need a big bold candle to confirm the ATR breakout. You’ll learn soon that the ATR indicator will break many times above the 20-EMA. But it won’t be confirmed by the price action in which case you don’t want to execute any trades. The ATR indicator is a great tool to use when it comes to establishing profit targets. This brings us to the next step of our Average True Range Trading strategy. Step #5: Your Take Profit Target Should Be Equal to the ATR Indicator Value The ATR indicator can be of great help to determine your take profit target. This is self-explanatory because if you know how much, on average, the market is prone to move, we want to conform to this reality and have that as a target. In our case, we can see the ATR volatility reading has a value of 26 pips. This means our profit target should be calculated 26 pips above the high of the breakout candle. The breakout candle high is at 1.3213 and adding 26 pips to that price we end up with a profit target at 1.3240. Add 26 pips for each TP 2, 3 & 4. Step #6: Place the Stop Loss below the Breakout Candle Low In trading, you have to learn to always protect your back and hide your protective stop loss at the most logical point. A break below the breakout candle low will invalidate our trade idea. This is the place where we want to hide our protective stop loss. Note** The above was an example of a buy trade. Use the same rules – but with the only difference that you need a bearish breakout candle – for a sell trade. Conclusion The Average True Range Trading strategy provides you with an unorthodox approach to trading. It combines both the market volatility and the price action to provide us with the best trades possible. We hope that by now you’re sold out to the power of the ATR indicator’s ability to forecast the market with a high degree of accuracy.
Long
by Tradingstrategyguides
3
QUESTION - WHAT ARE THE BEST FOREX TRADING STRATEGIES?2ND ICHIMOKU TREND FOLLOWING TRADING STRATEGY ICHIMOKU SETTING CHANGES Kijun Sen Blue line to Red Line Tenkan Sen Red line to Blue Line This will match Ichimoku settings for MT4 & 5 Step One: Using Ichimoku Indicator to Find the Uptrend or Downtrend Since this is a trend following strategy the first thing that needs to be identified is a trend. Do this on the one day, or four-hour time frame. These time frames will give you the best opportunity to identify a trend. In our example trade, we see a downward trend with an upper trendline of resistance. Drawing trend lines is one of the simplest ways to find a trend. Draw the trend line where there is support or resistance. Our example trade has three different levels of resistance to confirm this downtrend. This trading strategy will always go in the direction of the trend. So an uptrend will ALWAYS be a BUY. A downtrend will ALWAYS be a SELL. This strategy uses all of these tools to identify if a trend will keep going and gets you into the uptrend or downtrend. Step Two: Ichimoku Trading System The Tenkan Sen/ Kijun Sen Lines Cross This next step using the Trend Following Trading Strategy, I will explain what criteria are needed for a trade entry. Just to keep you on track, on the Tenkan Sen lines are Blue, Kijun Sen lines are Red. This crossing signal is going to tell you whether there is a strong bullish trend or a bearish trend. When the Tenkan Sen line will cross below the Kijun Sen line, then this will give you an indication that there is a bearish trend. You can see in our example trade the lines clearly cross which is our indication that this bearish downtrend is strong. These lines are designed to do that very thing when they cross each other. After the cross happened the Red line (Kijun) is now above the Blue line (Tenkan). That means that the trend is going to keep heading downwards. This is not an indication that the trend is breaking. This was used on a four-hour chart. This chart is the best time frame to use because it gives you a good overall picture of how the last few days have gone as far as it trending. In this timeframe, The lines need to cross either in the Kumo, which in the picture above is the orange area, or right below the cloud in this example. This was a sell signal because the trend was bearish while the Tenkan Sen line crossed below the Kijun Sen line in the senkou span area (Kumo). Note* If the lines cross above the Kumo area in a downtrend, do not buy/sell. The opposite can also be applied to a downtrend. If the lines cross above the Kumo area in a downtrend, do not sell/buy. The reason for this is because this would be a weak signal that the trend will keep going up or down. The trade must always be made to go in the direction of the trend. Recapping our rules using the Trend Following Trading Strategy, these three things must happen in order to enter a trade using the Ichimoku Indicator. Identify the trend. This needs to be an upward or downward trend. The trade must go the direction of the trend. Tenkan Sen line needs to cross Kijun Sen line. When the two lines cross, they need to cross in one of these two specific areas. The first place would be in the Kumo area. The second will depend if its an upward or downward trend. In an upward trend, they need to cross above the Kumo area. During a downward trend, they need to cross below the Kumo area. Note* This strategy is a trend following strategy. It is to help you identify a trend and identify that the trend will keep going either upward or downward. Step 3: Determining an entry point Trend Following Trading Strategy Determining an entry point should be very easy to do now. This is because once the Tenkan sen line crossed with the Kijun sen line either in the Kumo or just above or below on the four-hour time frame. You can use the four-hour chart to enter and exit. Or you can drop down to a 1-hour chart for entry and exit. I used the 4H to enter and exit on this example trade. But here is how to use a 1-hour chart for both. Now, simply drop down to a one-hour time frame chart and enter the trade. You may check other time frames, but there really is no need since you have already followed the rules to enter the trade on the four-hour time frame. This is just to give you a better perspective on where you are entering. Step 4: Stop Loss point Stop loss is always important to have in case the trade goes in the wrong direction and you are now stuck in a pickle whether to end the trade early or end it too late and lose it all! So we need a stop loss to help us out. Do this on the four hour time chart to see when the last areas of support or resistance were. There need to be two or more points of resistance or support. In the example below, you see that there were support levels. So in this example, it will go just below them. Step five: Exit Strategy The exit strategy using the Trend Following Trading Strategy will wait until and trend starts moving the wrong direction and the lines cross again. I used the 4-hour chart to exit my trade. It is recommended to monitor this on the one-hour time frame to get the most accurate reading for this particular strategy. The reason for this is that the trend is most likely coming to an end. The trend can come back up, but once the lines cross over again it is time to exit the trade. As you can see in the example the trend was slowly going back down. In the rules of this strategy, you will exit the trade if the lines cross over again. So a trade may be 2 hours, 10 hours, 3 days or even a week! It depends on what the chart tells you and if it continues to follow the rules of the strategy. Conclusion The Trend Following Trading Strategy only uses this one indicator. That makes you focus on this indicator and does not make you have to keep checking others to see what they are telling you. It may seem complicated at first with all of the different colored lines, clouds, and so on, however, when you break it down with this simple strategy, it makes it so much easier to understand. Make sure you remember to only be risking no more than 2% of your account! No matter how confident you are, you should always follow this to maximize your account. Thank you for reading the Trend Following Trading Strategy that uses the Ichimoku Indicator to help you gain a massive amount of pips at a time!
Education
by Tradingstrategyguides
5
1ST - MACD TREND FOLLOWING STRATEGYQUESTION - WHAT ARE THE BEST FOREX TRADING STRATEGIES? 1ST - MACD TREND FOLLOWING STRATEGY Step #1: Wait for the MACD lines to develop a higher high followed by a lower high swing point. This is an unorthodox approach to technical analysis. But, we at Trading Strategy Guides.com are different. We don’t mind doing uncomfortable things if that’s what it takes to succeed in this business. First, let’s visualize how an authentic swing point really looks on the MACD indicator: The first rule of thumb to recognize a swing high on the MACD indicator is to look at the price chart if the respective currency pair is doing a swing high the same as the MACD indicator does. A higher high is the highest swing price point on a chart and must be higher than all previous swing high points. While a lower high happens when the swing point is lower than the previous swing high point. Step #2: Connect the MACD line swing points that you have identified in Step #1 with a trendline. At this point, we really ignored the MACD histogram because much of the information contained by the histogram is already showing up by the moving averages. Look at the price action now and compare it to our MACD trendline we drew early. We can clearly notice that the MACD contains the price action much better and reflects the trend much clear. But, at this point, we’re still not done with the MACD indicator, which brings us to the critical part of our MACD Trend Following Strategy. Step #3: Wait for the MACD line to break above the trendline. (Entry at the market price as soon as the MACD line breaks above). When the MACD line (the blue line) crosses the signal line (the orange line) it’s an early signal that a bullish trend might start. However, if trading would be that easy we would all be millionaires, right? And that’s the reason why our MACD Trend Following Strategy is so unique. We’re not only waiting for the MACD moving averages to cross over but we also have our other criteria for the price action to break aka the trend line we drew early. This is a clever way to filter out the false MACD signals, but you have to be equipped with the right mindset and have patience until all the piece of the puzzle come together. If you were to trade just based on the MACD crossover over time you’ll lose money because that’s not a reliable strategy. But if you use the MACD indicator along with other criteria such what this strategy tells you to do, you will find great trade entries on a consistent basis. Step #4: Use Protective Stop Loss Order. (Place the SL below the most recent swing low). Now, that you already know how to enter a trade at this point you have to learn how to manage risk and where to place the SL. After all, a trader is basically a risk manager. You want to place your stop loss below the most recent low, like in the figure below. But make sure you add a buffer of 5-10 pips away from the low, to protect yourself from possible false breakouts. Did you notice? The MACD Trend Following Strategy triggered the buy signal right at the start of a new trend and what is most important the timing is more than perfection. We bought EUR/USD the same day the bullish divergence trend started. Now, what this has to do with the SL? Basically, a good entry price means a smaller stop loss and ultimately it means you’ll lose a lot less comparing it with the profit potential, so a positive risk to reward ratio. Step #5: Take Profit when the MACD crossover happens in the opposite direction of our entry. Knowing when to take profit is as important as knowing when to enter a trade. However, we want to make sure we don’t use the same trading technique as for our entry order. When the MACD line (the blue line) produces signal line crossovers (the orange line) we want to close the position and take full profits. Before taking profits, it’s important to wait for the candle close – either the 4h or the daily candle – depending on the time frame you trade so you make sure the MACD crossover actually happens. Note** The above was an example of a buy trade using the MACD Trend Following Strategy. Use the exact same rules – but in reverse – for a sell trade. Conclusion: The MACD Trend Following Strategy is a very simple trend following strategy and yet a very profitable strategy at the same time. As the saying goes, “The trend is your friend” and no matter if you’re just starting as a Forex trader or you’re already an established trader life is much easier when trading in the direction of the line of least resistance rather than fighting the trend which is a loser’s game. The success behind the MACD Trend Following Strategy is derived from one simple principle: momentum precedes price.
Education
by Tradingstrategyguides
3
BEST INTRADAY TRADING STRATEGIES - BIG 3 - 80 20 RSI - STOCHAST Question: What is the best trading strategy for Intraday? Answer: Intraday trading will take a great deal of your time. This is because you will be focusing on the charts all day that you will be trading. This type of trading requires a great deal of focus. Make sure the focus is one of your strengths. If you cannot focus, intraday trading will be extremely difficult for you to master. KEY TAKEAWAYS. Intraday is shorthand for securities that trade on the markets during regular business hours and their price movements. Day traders pay close attention to intraday price movements, timing trades in an attempt to benefit from the short-term price fluctuations. Scalping, range trading, and news-based trading are types of intraday strategies used by traders. Here is a list of strategies that we have compiled that work well for intraday trading: Big Three Trading Strategy. RSI Trading Strategy. Stochastic Trading Strategy. Big Three Trading Strategy. Trading Indicators list: 20 Period Simple Moving Average. 40 Period Simple Moving Average. 80 Period Simple Moving Average. Step 1 Apply Indicators to Chart. You can make them green, blue, red, pink, etc. The color is your personal preference. Again these are 20, 40, 80-period Simple moving averages. These are the best trend forex indicators and will help you determine trends and every time frame. After studying charts and applying different moving averages, we discovered these three work very well together for this strategy. This is why we called them the big three 😉. Step 2 of the best three trading indicators strategy: The Trend… Up or Down? Once your “Big Three” indicators are on your chart, go ahead and find a current up trend or downtrend. To find the trends, simply look at where the price action is. Then determine if it’s above the moving averages or below. If the price is above the three moving averages you have an uptrend: However, if the price is below the three moving averages then you have a downtrend: If the market is flat and the price action is not making a new high or low and just staying stagnant. I would avoid this type of market because we are looking for a trending market, not a flat or “sideways” market. Step 3 – Wait for the entire candle to close outside of Moving averages + Pull Back in Price Action + Continuation of Trend Wait for the price close below the lowest moving average in a downtrend: Or, Wait for the price close above highest moving average in an uptrend: Once you see this occur, you wait for the price to pull back and then move in the direction of the trend to make your entry. To determine this you can either go to a lower time frame or stay in the current time frame. Ensure the entire candle closed completely below or above the moving averages. The price action does not have to necessarily go back and touch the moving averages (which does occur). But you need to confirm there was a pullback in the price and then a continuation of the current trend. I prefer to wait for a break pullback before I go because, statistically, the price will most likely retrace during a bearing or bullish trend. For a more risky approach to this strategy, you could technically get in a trade right when the price breaks the highest or lowest moving average. But this method may cause more harm than good. The reason is that not every time it breaks these lines it is headed for a strong up or downtrend. Which is why you need to wait for a FULL candle to close above/below these lines. Wait for a pullback and go to enter the trade. What happened? ✓ Broke the above the moving average lines. ✓A full candle closed above the lines ✗ Retracement and the continuation of trend = this did not occur so you would not have entered the trade! It did retrace, however, the price did not continue to go in the direction of the trend. We need these three elements for the trade to occur. Which is why we call this the “Big Three” Trading Strategy Three different steps to find a trade and execute it. Stop Loss/Take Profit : Place your stop loss below the bottom moving average line. Depending on what time frame you are in will vary on how large your stop is. Scalpers may have a tight 5-10 pip stop While day traders will have a 30-50 pip stop Your take profit is when the price touches the 80-period line. The price crossed this line at +196 pips! You can tweak these rules as you wish. But we found the best way to push your winners with this strategy is to wait until the price touches the 80-period line. Conclusion Big Three Trading Strategy is fun to use and trade with. It is not very messy on your chart because there are only three little lines to look at. Our team believes this strategy uses the best three trading indicators that work well together. The moving averages are arguably the most popular forex indicators. 80 20 RSI Trading Strategy. RSI Adjustments: 14 period, to 8. 70 and 30 lines, to 80 and 20. This indicator comes standard on most trading platforms. You’ll just need to make the adjustments above. How to Trade with the RSI Trading Indicator This indicator will be the only indicator we use for this strategy. This is because we have a strict set of rules to follow before entering a trade. And these rules will, without a doubt, validate a reversal for us to open a trade. Before you use this strategy, make the above following changes to the RSI indicator: Step One: Find the currency pair that is showing a high the last 50 candlesticks. (OR low depending on the trade) The 80-20 Trading strategy can be used for any period. This is because there are reversals of trends in every period. This can be a swing trade, day trade, or a scalping trade. As long as it follows the rules, it is a valid trade. We also have training for building a foundation before a forex strategy matters. In this step, we only need to ensure it is the low or the high of the last 50 candles. Once we determine this low or high, then we can move on to the next step. I drew vertical lines on the price chart so you can see the 50 candle low that we identified. If you need to use horizontal lines on your chart to verify that the candle has closed the lowest the last 50, you can do so. This is not necessary but may be helpful for you to do and see how strong the trend is. Step Two Using the RSI Trading Indicator: When we find 50 candle low, it needs to be coupled with RSI reading 20 or lower. (If it’s high it needs to be combined with the RSI reading 80 or higher.). In our RSI chart we have a reading that hit the 20 line on the RSI and was the low the last 50 candles. Once we see that we had a low, the last 50 candles, and the RSI is BELOW 20, we can move to the next step. Remember that this strategy is a reversal strategy. It is going to break the current trend and move the other direction. Step Three: Wait for a second price (low candle) to close after the first one that we already identified. The second price low must be below the first low. Although, the RSI Trading indicator must provide a higher signal than the first. Remember that divergence can be seen by comparing price action and the movement of an indicator. If the price is making higher highs, the oscillator should also be making higher highs. If the price is making lower lows, the oscillator should also be making lower lows. If they are not, that means price and the oscillator are diverging from each other. Which is why it’s called “divergence.” Just because you see a bullish or bearish divergence, doesn’t mean you should automatically jump in with a position. We have rules in place that will capitalize on this divergence so that we can make a significant profit. Keep in mind, that this step may take time to develop. It is very important to wait for this second low because it gets you in a better trade making position. Price goes down/RSI goes up. That is the Divergence. Remember that our example is a current downtrend looking to break to the upside. If this was a 50 candle high, we would be looking at the exact opposite of this step. Once this criterion has been met, we can go ahead and look for entry. This is because the charts are showing us that a reversal is coming soon. Step Four: How to Enter the Trade with the RSI Trading Strategy. The way you enter a trade is very simple. You wait for the price to head in the direction of the trade and wait for a candle to close above the first candle that you identified that was previously 50 candle low. If you are struggling with this step, save the picture for reference. This will help guide you when looking for a trade. Step five: Once you make your entry, place a stop loss. To place your stop, bump back 1 to 3 time periods and find a reasonable, logical level to put your stop. You are looking for prior resistance, support. We placed our stop below this support area. That way if the trend continued and did not break, it could hit this level and bounce back up in our direction. I recommend you follow at least a 1 to 3 profit vs. risk level. This will ensure that you are maximizing your potential to get the most out of the strategy. You can adjust as you wish. Keep in mind that most successful strategies that identify breaks of a trend use a 1 to 3 profit vs. risk level. Stochastic Trading Strategy. Step #1: Check the daily chart and make sure the Stochastic indicator is below the 20 line and the %K line crossed above the %D line. We’re day trading, but having in mind the higher time frame sentiment and trend. This is a crucial part of the strategy because we only want to be trading in the direction of the higher time frame trend. The multiple time frame concept is important because it can give you a more robust reading of the current price action and more it can help you better time your entry and exit points. Note*: On the daily chart, it’s not necessarily for the stochastic moving averages to be below the 20 level. They can be moving away from the oversold territory and the signal can still be valid, but it shouldn’t be above 50 level. Step #2: Move Down to the 15-Minute Time Frame and Wait for the Stochastic Indicator to hit the 20 level. The %K line(blue line) crossed above the %D line(orange line). (Our chart was a 1H - it works too) This step is similar to the previous rule, but this time we apply the rules on the 15-minute time frame: wait for the Stochastic indicator to hit the 20 level and the %Kline (blue line) is crossing above the %D line (orange line). The 15-minute chart is the best time frame for day trading because is not too fast and at the same time not too slow. It is said that the market can stay in overbought and oversold condition longer than a trader can stay solvent. So we want to take precautionary measures, and this brings us to the next step on how to use the stochastic indicator. Step #3: Wait for the Stochastic %K line (blue moving average) to cross above the 20 level We want to trade smarter, right? Well, because the %k is the fast moving average it’s enough just to wait for it to cross above the 20 level because the %D line will follow suit. We don’t want to wait too much either as this will result in a reduced profit margin. Right now is the time you should switch your focus to the price action, which brings us the next step of the best stochastic trading strategy. Step #4: Wait for a Swing Low Pattern to develop on the 15-Minute Chart What is a Swing Low Pattern? A Swing Low Pattern is a 3 bar pattern and is defined as a bar that has one preceding and one following bar with a higher low. Day trading stochastics: When to Enter? This brings us to the next rule of the Best Stochastic Trading Strategy. Step #5: Entry Long When the Highest Point of the Swing Low Pattern is Broken to the Upside. So, after following the rules of the Best Stochastic Trading Strategy, a buy signal is only triggered once a breakout of the Swing Low Patterns occurs. Step #6: Use Protective Stop Loss placed below the most recent 15-minute Swing Low You want to place your stop loss below the most recent low, like in the figure below. But make sure you add a buffer of 5 pips away from the low, to protect yourself from possible false breakouts. Step #6: Take Profit at 2xSL Knowing when to take profit is as important as knowing when to enter a trade. The Best Stochastic Trading Strategy uses a static take profit, which is two times the amount of your stop loss. Note** The above was an example of a buy trade using the Day trading with the Best Stochastic Trading Strategy. Use the same rules – but in reverse – for a sell trade. Conclusion for this stochastic strategy: Day trading with the Best Stochastic Trading Strategy is the perfect combination between how to correctly use stochastic indicator and price action. The success of the Best Stochastic Trading Strategy is derived from knowing to read a technical indicator correctly and at the same time make use of the price action as well.
Education
by Tradingstrategyguides
1
CADJPY 1D RANGE TRADESRanges are repeatable trading chart patterns. Ranges are consolidation chart patterns that can breakout either direction. Each chart pattern will have defining trendlines of the support/resistance levels creating the pattern. Whatever time frame you are trading this chart pattern, wait for a candle close outside of the trendline in the direction of the breakout candle. (Our time frame preference is the Daily chart). Add volume indicator - Volume is the amount of $ that went into a particular candle or in Forex the # of trades that took place. Add ATR indicator - Volatility is the amount of price movement that occurred. Use the ATR to measure the price movement. When you see descending Volume bars and descending ATR line (which indicates volatility) this shows a dis-interest in traders to invest in this pair creating consolidation which creates the chart pattern. Trade Management after there is a breakout candle close. 1 - Position size (compare volume bar to volume ma line). a - Breakout candle must be 100% of average volume for a full position size. b - If 75% of average volume then ½ position size. (To find 75% of Volume look at the charts volume settings – divide smaller # into larger # = 75%+) 2 - Enter two trades. 3 - SL for both trades will be 1.5 x ATR. 4 - 1st trade TP will be 1 x ATR. 5 - No TP on 2nd trade – letting profit run and adjusting SL to follow price. 6 - When 1st TP hit – move 2nd trade SL to breakeven. 7 - Adjust the 2nd trade SL to follow price. *8 – After Breakout candle – if price closes back into chart pattern close trade *9 - When breakout candle is more than 1 ATR from breakout candle open. a - Enter 1st trade at candle close with ½ position size. b - Enter 2nd trade with a pending limit order that is 1 ATR of breakout candle open. c – Price should pullback to that pending limit order for 2nd trade. d – If Price returns back into chart pattern close trade before SL is hit.
by Tradingstrategyguides
2
TESLA 1D ASCENDING TRIANGLE LONG BREAKOUTAscending Triangles are repeatable trading chart patterns. Ascending chart patterns will have a directional bias depending on the previous incoming trend. Each chart pattern will have defining trendlines of the support/resistance levels creating the pattern. Whatever time frame you are trading this chart pattern, wait for a candle close outside of the trendline in the direction of the breakout candle. (Our time frame preference is the Daily chart). Add volume indicator - Volume is the amount of $ that went into a particular candle or in Forex the # of trades that took place. Add ATR indicator - Volatility is the amount of price movement that occurred. Use the ATR to measure the price movement. When you see descending Volume bars and descending ATR line (which indicates volatility) this shows a dis-interest in traders to invest in this pair creating consolidation which creates the chart pattern. Trade Management after there is a breakout candle close. 1 - Position size (compare volume bar to volume ma line). a - Breakout candle must be 100% of average volume for a full position size. b - If 75% of average volume then ½ position size. (To find 75% of Volume look at the charts volume settings – divide smaller # into larger # = 75%+) 2 - Enter two trades. 3 - SL for both trades will be 1.5 x ATR. 4 - 1st trade TP will be 1 x ATR. 5 - No TP on 2nd trade – letting profit run and adjusting SL to follow price. 6 - When 1st TP hit – move 2nd trade SL to breakeven. 7 - Adjust the 2nd trade SL to follow price. *8 – After Breakout candle – if price closes back into chart pattern close trade *9 - When breakout candle is more than 1 ATR from breakout candle open. a - Enter 1st trade at candle close with ½ position size. b - Enter 2nd trade with a pending limit order that is 1 ATR of breakout candle open. c – Price should pullback to that pending limit order for 2nd trade. d – If Price returns back into chart pattern close trade before SL is hit.
NASDAQ:TSLALong
by Tradingstrategyguides
2
EURJPY 1H SCHIFF PITCHFORK LONG TRADING STRATEGYThe Andrews Pitchfork Trading Strategy Our team at Trading Strategy Guides likes to use the Pitchfork trading system to identify a change in market behavior and make a profit from it. It’s important to understand what Andrews Pitchfork is and what pivots to use. This will give us more confidence later when taking the trades based on the Pitchfork trading system. Moving forward, we present the buy-side rules of the Andrews Pitchfork trading Indicator. Step #1: Identify the Three Pivot Points necessary to Draw the Pitchfork lines. The first thing you need to establish for the Pitchfork trading system is to identify three pivot points necessary to draw the Pitchfork lines. For more insights into this topic, check out the what is Andrews Pitchfork section. Since we’re looking for buying opportunities, we need to identify a series of rising pivot points. Step #2: Apply the Pitchfork indicator starting from Pivot 1 and move through Pivot 2 and Pivot 3. Now, use the three pivots identified and draw the Pitchfork trading system lines by connecting the pivots together. Start from Pivot 1 and move forward through Pivot 2 and Pivot 3. During this stage, you’ll be plotting the Pitchfork trading system lines. This will map the most important dynamic support and resistance levels. Once you’ve done this correctly you will see a rectangle or pitchfork formed. Step #3: Buy at the market at the first retest of the lower Pitchfork support trendline. With the Andrews Pitchfork trading strategy, the price should be contained inside the Pitchfork parallel channel. In this regard, if we’re looking for buying opportunities, assume the lower Pitchfork support trendline to hold the price for a bounce. We recommend buying when the lower Pitchfork support trendline is tested. The next logical thing we need to establish for the Andrews Pitchfork trading strategy is where to take profits. Step #4: Take Partial Profit at the Median Line, and Take Profit 2 at the upper Pitchfork Resistance trendline. The Pitchfork trading system gives you the flexibility to manage your trades in many different ways. Our mantra is, “Keep it Simple, Stupid.” In this regard, since the core principle of the Andrews Pitchfork trendline is that price tends to gravitate towards the median line, it’s the logical place to take some profits off the table. We only take partial profits on the median line because we also want to maximize our profits. This will give the market a chance to retest the upper Pitchfork resistance trendline. With the Andrews Pitchfork trading system, we’re trading in the direction of the trend. So, the expectation is to see the price moving higher and eventually retest the upper Pitchfork limits. Note: After TP1 was reached, move your SL at BE. We accomplish two things by doing this. First, we make sure that we accumulate profits. And secondly, if the markets reverse, make sure you stopped at BE and don’t lose any money. The next important thing we need to establish is where to place your protective stop loss. Step #5: Place the Stop Loss below the lower Pitchfork trendline and add a buffer of 20-30 pips. The recommended place to hide our protective stop loss is by adding a buffer of 20 – 30 pips below the lower Pitchfork trendline. Normally, in an uptrend, the support Pitchfork trendline should hold the price above. However, in order to protect ourselves from possible false breakouts, we’ve added a buffer of around 20-30 pips to our protective stop loss. Note* In a strong uptrend, it’s quite normal for the price to break and trade above the resistance Pitchfork trendline. Inversely, in a strong downtrend, it’s quite normal for the price to break and trade below the support Pitchfork trendline. Andrews Pitchfork Trading Strategy Conclusion There are many Andrews Pitchfork trading strategies that can be built around the Pitchfork trading system lines. They can all be simply derived from the Pitchfork’s trading rules. In order to use this system, you need to understand what Andrews Pitchfork is. You can also read our best short-term trading strategy. Andrews Pitchfork is simple to understand because, according to the Pitchfork trading system principles, you only need to know these three rules: Price tends to gravitate towards the median line. When price breaks the median line there is a high chance it will pull back to retest again the median line. When price breaks the Pitchfork channel on the opposite side of the channel direction, there is a shift in market sentiment and the trend can reverse.
Education
by Tradingstrategyguides
AUDUSD ALEXANDER ELDER 3 SCREEN TRADING STRATEGY As the name of the Elder trading system suggests there are three “screens” that we apply to every trade. The three screens used by Alex Elder can be summarized as follows: First Screen used for establishing a trading bias. The second Screen applies technical indicators to identify retracements against the trading bias established earlier. The third Screen is used for timing your entries using short-term breakouts in the direction of your trading bias. As you can probably tell, the Alex Elder trading rules involve the use of multi-timeframe analysis. The first screen starts with higher degree time frames and subsequently we downgrade our time frames lower as we progress with the 3 screens. In total, trading Alexander Elder system involves using three different time frames: The long-term trend – Alex Elder calls this as being the tide The medium-term trend – this trend is also known as the wave The short-term trend – it’s also referred to as the ripple Elder Trading System – First Screen According to Dr. Alexander Elder’s rules, the first screen starts with a time frame bigger than the time frame you’re looking to trade. For example, if your preferred time frame is the daily chart, you first start by looking at higher time frames like the weekly chart. This is the chart where you’re going to apply the trend-following indicators to establish your bias. If the trend is up, we only look for buy signals. Inversely, if the trend is down, we only look for sell signals. By going through this process, we can filter out trades against the primary trend. Elder Trading System – Second Screen Dr. Elder trading rules recommend downgrading our time frame lower. If during the First Screen we used the weekly chart, the next lower time frame we can use is the daily chart. Now, we look for price movements against the tide. In other words, we’re waiting for pullbacks or what Elder system calls the “wave”. Learn the most profitable approach to profit from pullbacks HERE. This in return will help us spot good times to execute your trades. The Elder trading system uses oscillators to identify these price movements against the tide. For example, if the weekly tide is up, then we’re looking for the oscillator to identify when the wave is down and that’s when we buy. On the other hand, if the weekly tide is down, then we’re looking for the oscillator to identify when the wave is up and that’s when we sell. Elder Trading System – Third Screen The Elder trading system refers to the third screen as the execution screen. Or, in other words, this time frame is used for better timing our entries. We have to downgrade our time frame lower. The next in order time frame is the 4h chart. When the trend on the third screen aligns with the trend of the first screen that’s the optimal trade entry. To time your trades, Alexander Elder uses a trailing stop in order to seize small breakout in the direction of the main trend. Basically, that’s what the Elder system is all about. Dr. Alexander Elder Rules on how to Use Multiple Time Frame Analysis The Alexander Elder trading strategy uses a technique to balance out the different information that comes from looking at different time frames. The Elder’s technique involves using a factor of four to six to classify his time frames. Let me explain… Alexander Elder factor of 4 to 6 can help us divide our charts into smaller units of 4, 5, or 6. The way to go about it is to first select your larger time frame (first screen) and then downgrade the charts lower by a factor of 4, 5, or 6. For example, if your first screen is the daily chart and we downgrade our time frame by a factor of 6, the next time frame would be the 4-hour chart. Four multiplied by 6, it gives us 24-hours, which is a day. Using a factor of 4 will require us to downgrade our charts to the 8-hours time frame. Now, to find your execution screen aka the third screen, we have to downgrade our time frames lower one more time. If we used a factor of 4, the next down in line time frame is the 1-hour chart. So, the 1-hour time frame is our third screen. Note* if after downgrading the charts, the exact time frame doesn’t exist, then as a general rule the closest one is used. This is the method used by Dr. Alexander Elder to select his time frames. Long Range - 1st screen Weekly - 2nd screen Daily - 3rd screen 4H Mid Range - 1st screen Daily - 2nd screen 4H - 3rd screen 1H Short Range - 1st screen 4H - 2nd screen 1H - 3rd screen 15m When to buy using the Alexander Elder Trading Strategy According to Alex Elder trading rules, the best moment to buy is when an uptrend has undergone a pullback and has started to resume the bullish trend. For this example, we’re going to use as the first screen the 4H chart. So, the 4H chart is used to determine the long-term trend. And, for this purpose, the 200-day moving average, which is the standard measurement of bullish and bearish trends, will be our trend filter. Check if the price is trading above the 200-day moving average to confirm the uptrend. The next step is to downgrade our time frame to the second screen. If the first screen used the daily chart, the next in line time frame is the 4-hour chart. The middle time frame is going to be used to spot corrections against the bullish trend. For this purpose, we’re going to use the MACD indicator applied to the 4-hour time frame. We wait for the MACD lines to rise from the oversold condition and the moving average slops have turned upwards again. Note* Dr. Alexander Elder recommends to use the Force index or another momentum oscillator to add more confluence. The next step is to downgrade our time frame to the third screen. If on the second screen we used the 4-hour time frame, the next in line time frame is the 1-hour chart. The short-term time frame is going to be used to time the market. However, since Alexander Elder doesn’t provide rigid rules for entry and exit, it’s time to reveal the Ace from our sleeve. For timing the market with great result, we’re going to use the Know Sure Thing indicator. On the 15m time frame, we wait for the Know Sure Thing oscillator to cross above the zero lines to trigger a buy signal. The KST indicator is great because it also signals burst in momentum. What does it mean for your trade? Simply, you get the chance for your trade to show a profit right from the start. Note* for sell signals the same trading rules can be applied but in reverse. Final words – Alexander Elder Trading System The Alexander Elder trading strategy can be used as a building block for your own trading strategy. The Elder trading system has the advantage of using multi time frame analysis to verify the market trend in several degrees. According to Dr. Alexander Elder, the single most important factor that will dictate your profitability is the quality of the records that you keep. We succeed in some trades and make mistakes in others. However, we can only improve our trading strategy only if we learn from both winning and losing trades. And, that’s why Dr. Elder believes that journaling is an absolute must as it makes you into your own teacher.
Education
by Tradingstrategyguides
14
EURAUD 15M BIG BEN BREAKOUT TRADING STRATEGYRule #1 Define the London Trading Range We’re going to use the range definition that takes into consideration only the body of the candles, excluding the wicks. Note* this trading rule can be adapted as you get more experienced at reading the price action. This strategy works because the Asia trading range tends to attract buy and sell stops above and below the trading range. The bulk of buying and selling stops becomes an easy target for the smart money. Remember that traders need liquidity to execute their orders. And, the smart money is always in search of liquidity to fill their large orders. That’s the reason why the smart money needs to trigger those stops. Rule #2: The One-Hour before the London Open Needs to Generate the Breakout Our backtesting results revealed that momentum really starts to pick up 1-hour earlier than the actual London opening session. There are some smart ways to trade this burst of momentum. Let’s see some technical ways to trade the pre-London open. We don’t need to guess in which way the market will break, we let the market tip his hand and show us the way. This is where things get interesting. Let me explain… During the London session we’re going to see the most traded volume thus the foreign exchange market should really take off in one direction or another. Rule #3 Price needs to fade Immediately after the London session opens, we want to see the price fading the pre-open move. If the move starts fading, we know it was a false breakout. Smart money has used the pre-open move to trigger the stops above the range and now they reverse the tie and start selling. We want to see price pulling back into the range at the same speed as it went up. Let me explain… In simple words, the bearish momentum used to produce the false breakout needs to be equal to the bullish momentum used to fade the pre-open move. We enter our trade after the first 5-minutes have confirmed that the price is reversing. Once this trade setup is completed, you should see a price formation that takes the V-shaped form (or inverse V-shape). Rule #4 Take Profit or Ride the Trend We can measure the size of the Asia trading range and project from the top or bottom of our range to get our profit target. But, oftentimes this type of setup can lead to a trading day that can extend in the days to come. Now, in this case, it’s wise if you employ other trading tactics so you can actually profit from this trend. In this example, the better take profit strategy would be to use a trailing stop. You need to be ready to explore other trading methods to manage your trades. Rule #5 Use a Time Stop Instead of a Price Stop In order to fade the London breakout, you need to use unconventional trading methods. In this regard, for our stop loss trading strategy we’re going to use a time stop instead of a price stop. The first time I’ve ever heard about the time stop concept was while reading the Market Wizards book. Billionaire Hedge Fund manager Paul Tudor Jones one of the greatest traders of our times said: “When I trade, I don’t just use a price stop, I also use a time stop.” So, how to apply the time stop to the London strategy? It’s very simple… If, in the first hour after the London open the price didn’t COMPLETELY reversed the pre-opening breakout, we exit the trade. It’s simple as that, no further explanation is needed.
Education
by Tradingstrategyguides
CADJPY 1D TRIANGLE BREAKOUTTriangles are repeatable trading chart patterns. Triangles are consolidation chart patterns that can breakout either direction. Each chart pattern will have defining trendlines of the support/resistance levels creating the pattern. Whatever time frame you are trading this chart pattern, wait for a candle close outside of the trendline in the direction of the breakout candle. (Our time frame preference is the Daily chart). Add volume indicator - Volume is the amount of $ that went into a particular candle or in Forex the # of trades that took place. Add ATR indicator - Volatility is the amount of price movement that occurred. Use the ATR to measure the price movement. When you see descending Volume bars and descending ATR line (which indicates volatility) this shows a dis-interest in traders to invest in this pair creating consolidation which creates the chart pattern. Trade Management after there is a breakout candle close. 1 - Position size (compare volume bar to volume ma line). a - Breakout candle must be 100% of average volume for a full position size. b - If 75% of average volume then ½ position size. (To find 75% of Volume look at the charts volume settings – divide smaller # into larger # = 75%+) 2 - Enter two trades. 3 - SL for both trades will be 1.5 x ATR. 4 - 1st trade TP will be 1 x ATR. 5 - No TP on 2nd trade – letting profit run and adjusting SL to follow price. 6 - When 1st TP hit – move 2nd trade SL to breakeven. 7 - Adjust the 2nd trade SL to follow price. *8 – After Breakout candle – if price closes back into chart pattern close trade *9 - When breakout candle is more than 1 ATR from breakout candle open. a - Enter 1st trade at candle close with ½ position size. b - Enter 2nd trade with a pending limit order that is 1 ATR of breakout candle open. c – Price should pullback to that pending limit order for 2nd trade. d – If Price returns back into chart pattern close trade before SL is hit.
by Tradingstrategyguides
3
USDCHF 1D TRIANGLE BREAKOUT TRADESTriangles are repeatable trading chart patterns. Triangles are consolidation chart patterns that can breakout either direction. Each chart pattern will have defining trendlines of the support/resistance levels creating the pattern. Whatever time frame you are trading this chart pattern, wait for a candle close outside of the trendline in the direction of the breakout candle. (Our time frame preference is the Daily chart). Add volume indicator - Volume is the amount of $ that went into a particular candle or in Forex the # of trades that took place. Add ATR indicator - Volatility is the amount of price movement that occurred. Use the ATR to measure the price movement. When you see descending Volume bars and descending ATR line (which indicates volatility) this shows a dis-interest in traders to invest in this pair creating consolidation which creates the chart pattern. Trade Management after there is a breakout candle close. 1 - Position size (compare volume bar to volume ma line). a - Breakout candle must be 100% of the average volume for a full position size. b - If 75% of average volume then ½ position size. (To find 75% of Volume look at the charts volume settings – divide smaller # into larger # = 75%+) 2 - Enter two trades. 3 - SL for both trades will be 1.5 x ATR. 4 - 1st trade TP will be 1 x ATR. 5 - No TP on 2nd trade – letting profit run and adjusting SL to follow price. 6 - When 1st TP hit – move 2nd trade SL to breakeven. 7 - Adjust the 2nd trade SL to follow price. *8 – After Breakout candle – if price closes back into chart pattern close trade *9 - When breakout candle is more than 1 ATR from breakout candle open. a - Enter 1st trade at candle close with ½ position size. b - Enter 2nd trade with a pending limit order that is 1 ATR of breakout candle open. c – Price should pullback to that pending limit order for 2nd trade. d – If Price returns back into chart pattern close trade before SL is hit.
by Tradingstrategyguides
5
3 Simple Tricks to Recover from a Drawdown like a Pro3 Simple Tricks to Recover from a Drawdown like a Pro. In our private client area, we often talk about the importance of understanding drawdowns. The first step in dealing with drawdowns is to acquire the right mindset that is conducive to trading. Do you want to learn how to live through the daily drawdown that is almost inevitable and all traders must go through? Statistics have shown that the majority of your life trading career will be spent in drawdowns. If you spend so much time in a drawdown, it’s important to learn how to recover from drawdowns. With that said, here are 3 trading tips you should use to help you recover from drawdowns: #1 Know the Maximum Drawdown of Your Trading Strategy Through effective backtesting methods, you can actually discover the maximum DD of your trading strategy. This will mentally prepare you for them. If a trader learns how to develop an awareness of what will happen to his account during a drawdown period, you’ll have the mental capacity to cope with the drawdown and stick with your trading strategy through these tough times. That’s assuming you have a profitable strategy. If you can’t learn to master this discipline, then you’re better off to stick to algorithmic trading and let the robot do the job for you. Automation will often eliminate counterproductive emotional decisions. #2 Cut Back Your Position Size Another thing you can do to cope with the painful reality of drawdowns is to risk per trade or the position size. Contrary to the popular belief that teaches you to increase your risk, so you can accelerate the recovery process, that type of behavior is very destructive for your account balance. Aggressive pyramiding to escape a drawdown is even worse. Take for example, how legendary trader Richard Denis thought the Turtles to handle drawdowns. When drawdowns occurred, they would reduce the trading size from 2% down to 1.6%. They would continue to cut back their position size if the DD was extending. This preventive action is for self-preservation of your capital. Learn it, and use it in your favor. #3 Increase your Risk-Reward Ratio A positive and big risk to reward ratio is part of every successful trading system. To escape a drawdown faster you need to learn how to increase your risk and reward ratio. One of the most effective methods to improve your RR ratio is to perfect your entry strategy. By having a better market timing you can keep your stop-loss very tight, thus further limiting your losses. With a RR ratio of 1:3, you can escape a drawdown period pretty fast even if your win rate is still somehow very low. If you can make a pact with yourself and not flinch in the face of adversity when your risk tolerance is reached your daily mental battle is half won. Final Words – Drawdown in Forex Trading In summary, drawdown forex is the most important risk metric because DD can make you switch your trading strategy if you have too many consecutive losses or if our losses last for too long. Forex drawdown can literally kill your account if you don’t know how to recover from a drawdown trading period. The only way you’ll never experience a drawdown is if you stop trading. You need to accept the reality that the drawdown in forex trading is inevitable There is no such thing as risk-free returns. You need to work smart not only to make profits but to also keep those profits. With that said, you only need to keep in mind these three drawdown trading rules, if you want to manage DD like a pro: Know your historical max DD Cut back your trading size Increase your RR ratio Thank you for reading!
Education
by Tradingstrategyguides
1
LTCUSD 1H CAMARILLA MEAN REVERSAL STRATEGYNow, we know that this Camarilla pivot trading strategy tends to produce less trading signals. This means that you won’t be having a trade signal every day. Don’t worry about it because we have one more trick in our sleeves. We can show you a very reliable Camarilla mean reversion strategy. This Camarilla pivot trading strategy only uses the power of divergence along with the pivot points. It sounds complicated, but in practice is quite easy. To simplify the process we’re going to look at buying near Camarilla support S3. All you need to look for the price to make a new low that at the moment we touch the support S3. This means we broker below the most recent intraday swing low. In this particular example, the price broke below the support S3. Many times it will happen this way. So, don’t expect the Camarilla pivot support levels to hold to the pip. This is why we enter our position once the price gets back above the support S3. With this Camarilla pivot trading strategy we place the protective stop loss below the support S4. Note* Use the same rules, but in reverse for selling near the resistance R3.
COINBASE:LTCUSD
by Tradingstrategyguides
2
ETHUSD 30M CAMARILLA PIVOT TRADING STRATEGYDay Trading Camarilla Pivot Trading Strategy Mean reversion day trading inherently has lower profit margins with Camarilla pivots. The reason behind this is very simple due to the proximity of the Camarilla points with the price action you’re left with lower profit margins. So, from the start, you have a handicap that as a trade you need to overcome. Trading is all about finding those situations where we maximize our profits and minimize the risk. That’s the reason why we prefer trading breakouts of the Camarilla pivot points. The profit potential is far greater. However, in order to confirm our breakout trade, we’re going to throw in another indicator. So, what’s the best combination with the Camarilla pivot points? The CCI or Commodity Channel Index can be used in combination with Camarilla points to confirm breakouts. Learn more about how the pro’s trade using the CCI trading system HERE. So, what are the rules to confirm the Camarilla pivot point breakouts? There are two rules: For bullish breakout trades above the resistance R4, we need to see a CCI reading of +100 at the moment the breakout happens. For bearish breakout trades below the support S3, we need to see a CCI reading of -100 to confirm the breakout. Note* an effective way to hide your protective stop loss would be below (above) the resistance R3 (support S3). You determine your own TP.
COINBASE:ETHUSDEducation
by Tradingstrategyguides
2
BTCUSD 1D 6 STEP LONG STRATEGYHow to Trade Using the Stairs Trading Strategy If you don’t want to trade on pure randomness, you need a trade trigger before opening an order. When the price reaches your level of interest, you need some type of confirmation. This is where our entry technique can be applied across all types of trading strategies. Step #1: Identify a strong trading market that has a clear bullish trend. The first step is to identify a strong trading market that has a clear bullish trend. The Stepping Stones strategy seeks to take advantage of the market trend, and it can be considered as another pullback trading strategy. Our team at Trading Strategy Guides has discovered that you can benefit more by using the stochastic indicator to trade pullbacks rather than trying to pick a falling knife or to jump in front of a train. Now let’s see how the professional Forex traders make use of the stochastic indicator. Step #2: The Stochastic indicator needs to develop a double bottom pattern. The second bottom has to be higher than the first bottom. It’s critical to make the difference between the double bottom price pattern and the fact that we’re looking at the stochastic indicator to develop a double bottom. The other condition is that we need the second stochastic swing low to be higher than the first bottom. Once these two conditions are satisfied, we still need one more caveat to be fulfilled which brings us to the next rule of how to trade stair strategy. Step #3: Both stochastic swing lows need to be in oversold territory below the 20 level A stochastic reading below the 20 level suggests that the market is oversold and there is a high chance of reversal. Many times a market can remain in oversold or overbought territory longer than you can remain solvent. This is why we have put other trading rules in place so we can avoid this situation. Now it’s time to switch our focus to the actual price and see the relationship between the stochastic indicator and the price action that needs to be satisfied. Step #4: Look for a divergence to develop between the stochastic indicator and the market price. Before we go any further than this, we need to clarify one thing. The way people trade divergence is by using a variety of momentum-based indicators and measure or compare when the momentum indicator and the price diverge. In other words, when the price makes a lower low but the momentum indicator fails to make a lower low and instead makes a higher low, then we have a situation where we have divergence. So, what type of divergence we want to see? In plain English, we look for the price not to drop that much compared with the stochastic indicator. Look for how the stochastic indicator is falling very fast into oversold territory, but the BTCUSD exchange rate is dropping at a much slower pace. Note* the stronger the divergence between the stochastic indicator and the price the better the buy signal can be. The next step will highlight the trigger for our entry order. Step #5: Buy after the second bottom develops a stochastic crossover The trigger for our entry is quite simple. Once the second bottom produces a stochastic crossover, we jump straight into the market and start buying so we won’t miss a great entry opportunity. In this scenario, our entry is as close as possible to the endpoint of the retracement. You really can use any type of exit strategy as you wish. Now, of course, this is just an entry technique but, we want to go one step forward and outline some strategies to protect your capital and at the same time to maximize your profits. Step #6: Place the protective stop loss below the last swing low. You determine EXIT or Take Profit when the slow stochastic moving average enters in overbought territory above 80 levels. Place your protective stop loss 10 pips below the last swing low. We’re adding a buffer of 10 pips to protect ourselves in case of any false breakouts. Usually, our stop will be very close to our entry price which is the reason why this swing trading strategy is such a great entry technique to keep your losses small. Where to take profit is also quite intuitive using the stair-step chart pattern. Once the stochastic slow moving averages enter overbought territory or when it touches the 80 level, we want to cash out. Alternatively, if you’re going to try to stay longer in the trend you can try our 10-day breakout strategy. Note** the above was an example of a BUY trade using the stepping stones strategy. Use the same rules for a SELL trade – but in reverse.
COINBASE:BTCUSDEducation
by Tradingstrategyguides
1
RCL 1D ASCENDING TRIANGLE BREAKOUTAscending Triangles are repeatable trading chart patterns. Ascending chart patterns will have a directional bias depending on the previous incoming trend. Each chart pattern will have defining trendlines of the support/resistance levels creating the pattern. Whatever time frame you are trading this chart pattern, wait for a candle close outside of the trendline in the direction of the breakout candle. (Our time frame preference is the Daily chart). Add volume indicator - Volume is the amount of $ that went into a particular candle or in Forex the # of trades that took place. Add ATR indicator - Volatility is the amount of price movement that occurred. Use the ATR to measure the price movement. When you see descending Volume bars and descending ATR line (which indicates volatility) this shows a dis-interest in traders to invest in this pair creating consolidation which creates the chart pattern. Trade Management after there is a breakout candle close. 1 - Position size (compare volume bar to volume ma line). a - Breakout candle must be 100% of average volume for a full position size. b - If 75% of average volume then ½ position size. (To find 75% of Volume look at the charts volume settings – divide smaller # into larger # = 75%+) 2 - Enter two trades. 3 - SL for both trades will be 1.5 x ATR. 4 - 1st trade TP will be 1 x ATR. 5 - No TP on 2nd trade – letting profit run and adjusting SL to follow price. 6 - When 1st TP hit – move 2nd trade SL to breakeven. 7 - Adjust the 2nd trade SL to follow price. *8 – After Breakout candle – if price closes back into chart pattern close trade *9 - When breakout candle is more than 1 ATR from breakout candle open. a - Enter 1st trade at candle close with ½ position size. b - Enter 2nd trade with a pending limit order that is 1 ATR of breakout candle open. c – Price should pullback to that pending limit order for 2nd trade. d – If Price returns back into chart pattern close trade before SL is hit.
NYSE:RCLLong
by Tradingstrategyguides
4
PCG 1D ASCENDING TRIANGLE BREAKOUTAscending Triangle is a repeatable trading chart pattern. Ascending chart patterns will have a directional bias depending on the previous incoming trend. Each chart pattern will have defining trendlines of the support/resistance levels creating the pattern. Whatever time frame you are trading this chart pattern, wait for a candle close outside of the trendline in the direction of the breakout candle. (Our time frame preference is the Daily chart). Add volume indicator - Volume is the amount of $ that went into a particular candle or in Forex the # of trades that took place. Add ATR indicator - Volatility is the amount of price movement that occurred. Use the ATR to measure the price movement. When you see descending Volume bars and descending ATR line (which indicates volatility) this shows a dis-interest in traders to invest in this pair creating consolidation which creates the chart pattern. Trade Management after there is a breakout candle close. 1 - Position size (compare volume bar to volume ma line). a - Breakout candle must be 100% of average volume for a full position size. b - If 75% of average volume then ½ position size. (To find 75% of Volume look at the charts volume settings – divide smaller # into larger # = 75%+) 2 - Enter two trades. 3 - SL for both trades will be 1.5 x ATR. 4 - 1st trade TP will be 1 x ATR. 5 - No TP on 2nd trade – letting profit run and adjusting SL to follow price. 6 - When 1st TP hit – move 2nd trade SL to breakeven. 7 - Adjust the 2nd trade SL to follow price. *8 – After Breakout candle – if price closes back into chart pattern close trade *9 - When breakout candle is more than 1 ATR from breakout candle open. a - Enter 1st trade at candle close with ½ position size. b - Enter 2nd trade with a pending limit order that is 1 ATR of breakout candle open. c – Price should pullback to that pending limit order for 2nd trade. d – If Price returns back into chart pattern close trade before SL is hit.
NYSE:PCGLong
by Tradingstrategyguides
ETHUSD 1D TRIANGLE BREAKOUTTriangles are repeatable trading chart patterns. Triangles are consolidation chart patterns that can breakout either direction. Each chart pattern will have defining trendlines of the support/resistance levels creating the pattern. Whatever time frame you are trading this chart pattern, wait for a candle close outside of the trendline in the direction of the breakout candle. (Our time frame preference is the Daily chart). Add volume indicator - Volume is the amount of $ that went into a particular candle or in Forex the # of trades that took place. Add ATR indicator - Volatility is the amount of price movement that occurred. Use the ATR to measure the price movement. When you see descending Volume bars and descending ATR line (which indicates volatility) this shows a dis-interest in traders to invest in this pair creating consolidation which creates the chart pattern. Trade Management after there is a breakout candle close. 1 - Position size (compare volume bar to volume ma line). a - Breakout candle must be 100% of average volume for a full position size. b - If 75% of average volume then ½ position size. (To find 75% of Volume look at the charts volume settings – divide smaller # into larger # = 75%+) 2 - Enter two trades. 3 - SL for both trades will be 1.5 x ATR. 4 - 1st trade TP will be 1 x ATR. 5 - No TP on 2nd trade – letting profit run and adjusting SL to follow price. 6 - When 1st TP hit – move 2nd trade SL to breakeven. 7 - Adjust the 2nd trade SL to follow price. *8 – After Breakout candle – if price closes back into chart pattern close trade *9 - When breakout candle is more than 1 ATR from breakout candle open. a - Enter 1st trade at candle close with ½ position size. b - Enter 2nd trade with a pending limit order that is 1 ATR of breakout candle open. c – Price should pullback to that pending limit order for 2nd trade. d – If Price returns back into chart pattern close trade before SL is hit.
COINBASE:ETHUSD
by Tradingstrategyguides
BTCUSD 1D ASCENDING CHANNEL BREAKOUTAscending Channel Ranges are repeatable trading chart patterns. Channel ranges are consolidation chart patterns that can breakout either direction. Each chart pattern will have defining trendlines of the support/resistance levels creating the pattern. Whatever time frame you are trading this chart pattern, wait for a candle close outside of the trendline in the direction of the breakout candle. (Our time frame preference is the Daily chart). Add volume indicator - Volume is the amount of $ that went into a particular candle or in Forex the # of trades that took place. Add ATR indicator - Volatility is the amount of price movement that occurred. Use the ATR to measure the price movement. When you see descending Volume bars and descending ATR line (which indicates volatility) this shows a dis-interest in traders to invest in this pair creating consolidation which creates the chart pattern. Trade Management after there is a breakout candle close. 1 - Position size (compare volume bar to volume ma line). a - Breakout candle must be 100% of average volume for a full position size. b - If 75% of average volume then ½ position size. (To find 75% of Volume look at the charts volume settings – divide smaller # into larger # = 75%+) 2 - Enter two trades. 3 - SL for both trades will be 1.5 x ATR. 4 - 1st trade TP will be 1 x ATR. 5 - No TP on 2nd trade – letting profit run and adjusting SL to follow price. 6 - When 1st TP hit – move 2nd trade SL to breakeven. 7 - Adjust the 2nd trade SL to follow price. *8 – After Breakout candle – if price closes back into chart pattern close trade *9 - When breakout candle is more than 1 ATR from breakout candle open. a - Enter 1st trade at candle close with ½ position size. b - Enter 2nd trade with a pending limit order that is 1 ATR of breakout candle open. c – Price should pullback to that pending limit order for 2nd trade. d – If Price returns back into chart pattern close trade before SL is hit.
COINBASE:BTCUSD
by Tradingstrategyguides
4
SILVER 1D DESCENDING TRIANGLE BREAKOUT SHORT TRADEDescending Triangles are repeatable trading chart patterns. Descending chart patterns will have a directional bias depending on the previous incoming trend. Each chart pattern will have defining trendlines of the support/resistance levels creating the pattern. What ever time frame you are trading this chart pattern, wait for a candle close outside of the trend line in the direction of the breakout candle. (Our time frame preference is the Daily chart). Add volume indicator - Volume is the amount of $ that went into a particular candle or in Forex the # of trades that took place. Add ATR indicator - Volatility is the amount of price movement that occurred. Use the ATR to measure the price movement. When you see descending Volume bars and descending ATR line (which indicates volatility) this shows a dis-interest in traders to invest in this pair creating consolidation which creates the chart pattern. Trade Management after there is a breakout candle close. 1 - Position size (compare volume bar to volume ma line). a - Breakout candle must be 100% of average volume for a full position size. b - If 75% of average volume then ½ position size. (To find 75% of Volume look at the charts volume settings – divide smaller # into larger # = 75%+) 2 - Enter two trades. 3 - SL for both trades will be 1.5 x ATR. 4 - 1st trade TP will be 1 x ATR. 5 - No TP on 2nd trade – letting profit run and adjusting SL to follow price. 6 - When 1st TP hit – move 2nd trade SL to breakeven. 7 - Adjust the 2nd trade SL to follow price. *8 – After Breakout candle – if price closes back into chart pattern close trade *9 - When breakout candle is more than 1 ATR from breakout candle open. a - Enter 1st trade at candle close with ½ position size. b - Enter 2nd trade with a pending limit order that is 1 ATR of breakout candle open. c – Price should pullback to that pending limit order for 2nd trade. d – If Price returns back into chart pattern close trade before SL is hit.
OANDA:XAGUSDShort
by Tradingstrategyguides