Envelope (ENV)
A quick and dirty trading method I useSo lately I've been using an Envelope indicator, and nothing else. I have it set to a 3-period smoothed MA on MT5, which is basically the same thing as 6 exponential on TradingView. From there, for every pair, I fine-tune the envelope's deviation range to create a very specific situation.
1) You want consolidation candles to generally close inside of the envelope. Most candles should close inside the envelope, or at least have presence on the inside. Sometimes trends are stupidly strong, though.
2) You want momentum candles to close outside of the envelope.
So how do you trade it? Simple.
1) When a momentum candle closes outside the envelope, you look to enter a position on the inside of it.
2) You place a hard stop loss, which could be a 1:1 if you think in ratios, or a specific amount of money that you're willing to lose. The stop should be reasonably wide, like pretty distant from the opposite side of the envelope, because wicks happen all the time.
3) You close with a loss *only* if the price either hits your hard stop (unlikely), or if a candle closes on the wrong side of the envelope. This is important!
4) You take profit either when you're happy (typically 1:1 or greater), or with a trailing stop loss.
The purpose of this trading system is to trade the *exact* trend you're on currently, rather than going for some kind of fibonacci pullback or whatever. On top of that, your losses are well controlled since your entries usually won't be far from your exit if you're wrong.
Example:
big orders bumping around triple qsusing order flow analysis and a volume profile you can see that a lot of action around the upper 24s has led to a bounce in the nasdaq and TQQQ 3x is a great way of capturing that. if we hold $24.58 and break $24.81 we should see that $25.86 level again no problem. envelope is flattening out, so id imagine this bounce has legs as long as were not seeing outflow on this etf.
run tomorrowhere is another top lift is 1 day top right is 5 day bottom left is one month bottom right 3 months 3 indicate bullish and the other i think is suggesting a little pullback after a small gain then there will be a breakout but please remember i just started charting a couple days ago
still bullishhere is 4 different time frames of envolpe chart for sunw top left is 1 day top right is 5 day bottom left is one month bottom right is 3 month it shows when it dipped today and its above the middle line on all 4 which suggests bullish trend but if you notice bottom two are out of graph...so i am liking this for an even bigger run tomorrow
bullishholy this is the envelope when they just barely break thru top line means bullish trend will continue these are outside the upperline should be a good day for this one
Displaced EMA EnvelopeRutgers news reminds me of a suggestion I had made to Support.
Combine the tools "Displaced EMA" and "EMA Envelope" so the envelope can
better fit the price action. User should choose channel width (as well as the
left-displacement), perhaps as multiple of Average True Range.
Resulting channel is better aid than trend-lines, and can resemble cycle
analysis of James D. Hurst.
Keltner channels are also more useful with option to left shift by half
the calculation period.
Karma ... take the system to another level ... planes. Why geometry works with numbers ... well, I could show you some of the stuff I have been working on, and numbers... regardless as how random or linear they may seem, have value associated.... sort of like Karma. Guessing when your going to get your Karma, is Forex ... a fickle bitch.
The chink in this armor, is pretty straightforward... follow the trend. Guessing or estimating trends can be prosperous, but will only work as long as your long term strategy is following the trend. A simple analogy is swimming against the current, although your destination might be the shore, sometimes you will find a horizontal vector to the shore a better approach.
:-)