ISH recap with my strategyThe best way to win, is not to lose. Back test your strategy and see how many losers you can eliminate. That is what blows up your account.
the hardest thing to do is remove emotion, believe me, I struggle with it too. Recognize when it happens, take a step back and review your strategy.
Trade safe,
mnovo
Strategy!
How to: "Auto-Trendline Strategy"RULES: -----------------Auto-Trendline Strategy ------------------------
For LONGS:
1- 3 Green squares on the Trend meter (Oscillators)
2- Green Trend line price Break
3 - Price above 10 EMA
4- Watch for support/resistance Gap in between.
5- Open 1:1 Risk reward ratio Long based on the largest wick of last 8 candles.
For SHORTS:
1- 3 Red squares on the Trend meter (Oscillators)
2- Red Trend line price Break
3 - Price below 10 EMA
4- Watch for support/resistance Gap in between.
5- Open 1:1 Risk reward ratio short based on the largest wick of last 8 candles.
In our case rule 1,2 and 3 are coded in the triangles so you only need 2 indicators (Auto-trendline strategy) (Support/Resistance zones)
You only need to follow rule 4 and 5.
DO NOT WAIT FOR FULL TP, THIS IS A SCALPING STRATEGY DONT GET GREEDY
when alt season begins this strategy is gonna be golden =) enjoy
Alternate trading strategyIn this video we use the APO-Absolute Price Oscilator in conjunction with the 21 day EMA and the 200EMA as aditional confirmations to enter and exit trades safely. We do give up some profit for security of strong trends instead further strengthening the avoidance of bad trades. While you can use this technique on shorter time frames, time is valuable. You could just check your positions 15min per day instead of staring at the screens all day and do something else like enjoying life and freedom.
Enjoy and trade safe...
M~
Alternative analysis methodA change has come up to my thought...
Now I share shortly, how to use 1 time frame window for low time frame without TDI Pro, while you still use it on the 2nd window. This way TDI Pro does not confuse anyone on the lower time frame scanning to now give filtered better analysis on the charts.
Improve your trading strategy with a trend filterWatch this video to learn about how you can improve and supplement your trading strategy with a trend filter.
So what is the secret? Part 2. Going from begginer to pro.Hello, so first of all I mentionned in this idea what I think are the most important rules to keep in mind, and a guideline on how to build a system / a career:
In this idea I would like to show what I think is the end goal, and how I would advice someone getting there.
I saw a nice chart on the internet "How traders think versus How trading actually works", I modified it a bit, this is my view on the subject:
I would not know how to explain to a complete beginner, but I think I understand the beginners that already read a bit about all this.
Let me explain what is in this pie:
About the watching the markets... some... people... still deposit money to cryptopia. Exchange went bankrupt. "It's just FUD", "don't look at the news they might convince you not to H0DL". Crypto community is the perfect example of what not to do, just unbelievable. Complete bunch of idiots. People that deposit money to a broker/exhange that went down have nothing to do in this business, stick to watching tv.
If I had to guide someone I think going throught these steps would be what I would choose:
0- If they are eager to buy and sell with real money, go on a small account and sizes as small as possible. If they are already not able to control themselves, no point even trying. Cannot advance they have to be able to control themselves first.
1- Start just reading, watching videos. There is alot of nonsense, trolling, and just dumb ignorant people that give their opinion. So do not take anything for granted and absorb it all. There are some warning signs. Kid that went huge leverage and made 10,000% returns at once and starts calling himself the legend, the master of charts... Most people can tell this is dumb, right? I am not sure to be honest. Well at least 1/3 can I imagine. If you can't, go to step -1 and build your understanding of the world, common sense, some mathematics too especially probabilities.
2- I would make a feedback on what the person knows, I do this myself all the time. Re-learn everything make sure the foundations are solid and that it is all natural don't need to overthink it. But with experience it will really become natural. Decide what you like more (this will change with time) and start going in that direction. Also check if what you like (catching the falling knife bottom right before the trend reverses and riding it to the top) is possible (no) or just silly (yes).
2- Write a plan or a set of rules. How do you want to do this? Any system can do. Have a system that tells you what to look for and then detail it a bit.
Say the rules are 1- Define the trend 2- Find out what is driving it and where it could end 3- Risk factors 4- Should I hop on & when? 5- How to set stop loss 6- Exit
For each number from 1 to 6 you write how you do this. Does not have to be perfect.
3- I would suggest starting with a risk reward ratio not too high I just do not think it is a good idea to have a reward much greater than risk at this point. Try being right about the trend as much as possible, avoiding the really bad days, not to gamble, not to chase losers, understanding more how markets move.
Stick to 1 or 2 (2 may be preferable to not get bad habits) markets. Maybe Bitcoin (and some alts) since it is very popular and also very educational, as well as gold, or indices if you prefer. Indices good. I think this is what I learned the first. Story time I remember (I think) the first chart I analysed was Bitcoin in 2014. It had no support till 100 to 250$ yikes. I was already a bear before I was a trader back in 2014. First markets I learned about and watched were the stock markets. Every one was always super serious about how many points were up or down and afraid of a big crisis, even when I was 8 or so I was thinking "oh calm down dude".
4- Time for a break. Might as well do that after a lose spree.
5- Review past trades. What was good? What went wrong? What happened that day? Why? Why did the price go up? Down? Following people on various sites helps for this rather than just being isolated, well I think it does, but careful there are plenty of idiots let's call them that, that just attribute price action to the dumbest things. When you start breathing talking finance, it becomes easier. At that point you may be 1 year in, you should start to get a feel of the markets and understand better how they move. Focus on working on your strong points weak points average points :p
6- You should have refined your trading, and try having a profitable or at least break even strategy over a great enough number of trade that you know it is probably not just a lucky - on unlucky - run. Being non delusional is important. If you kept winning in a raging bull market, be aware of that. You are on your own and there is no one to tell you that. Well there is MrRenev but people do not listen. I think now you should focus on avoiding really risky trades such as have the potential for massive slippage or just ahead of some important report, weed out the bad ones. Also, you get better at holding when you should hold, and exiting when you should exit.
7- Now is the time to increase that risk to reward ratio. The best, the really top trades, they all have high risk to reward ratios. It is broken. It is like hacking. You can get very profitable this way. There are some opportunities where the odds are high even thought the risk to reward is big. One of the reason why I do not recommend this earlier is you lose 5 in a row you do not know if you made a mistake or it is all normal. Better have plenty of winners and try looking "ok so did I enter too early or not how far did they go" etc. You just have more to work with. I don't think going high reward/risk from the start is really a good idea.
Once you are good at picking winners, and weeding out the really bad ones, you can focus on raising your RR while trying to maintain a decent winrate.
If you manage to get a high RR, above 5, then maybe you can focus on increasing winrate a bit again. It might be time to start looking at a new market too, if you are comfortable with the 1/2 you started with.
8- Permanent learning improving, adjusting to new conditions. At that point you know what to do and it gets more specific.
* You can use an indicator if you like it, but chill out with the indicators my gawd. Most of them don't even tell anything you cannot see on the chart for yourself when you have some screen time.
How I trade outside bars - Trading Strategy - FMTA simple trading strategy.
Here we have a stripped back version of my trading strategy.
I simply use outside bars to indicate momentum and turning points in the market.
The first highlighted bar from April 2018 shows an outside bar completely engulfing the previous weeks price action. From here the market moves over 400 pips north.
The second highlighted bar shows a reversal from our previous move up. Again the price action completely engulfs the previous weeks. We could then gain another 400+ pips.
This repeats it self on the the third and forth bar.
We only trade outside bars from the extremities of the Bollinger bands. When entering a trade I place a pending order on a 50% retracement from the high (or low) of the outside bar.
Stops are usually placed just above the high or low of the outside bar.
You won’t catch every pip and your pending order won’t activate on every trade but this is a simple yet powerful trading system which can be used on various time frames. I tend to stick to the daily, weekly and monthly charts.
On the lower time frames (1hr/4hr) I will use the RSI(2) for further clarification on oversold and overbought markets by only trading outside bars if the RSI is above 95 or below 5.
If you have any question feel free to ask.
Don't listen too much to what I or anyone "thinks"What's up guys,
I just want to share this chart with you and some perspective.
If you don't know, I started trading about two years ago. I was profitable for almost all of that time, not because I was good, but because I bought bitcoin below $1,400 and thankfully didn't cock it up too, too hard. That said, I don't think I was any good until about a year and six months in. That's when I started to make posts here.
Being a pretty novice trader, I have a lot to learn, but I have learned much still and always am eager to share what I've learned.
Here is some general advice...
1) Do not use very much money initially, ie don't invest more than you can afford to lose
2) Do not use leverage unless you understand it (you can lose all of your money and more shorting using traditional brokerages)
3) Do not worry about getting rich quick
4) Do learn all you can from better traders (buy their books, listen to their podcasts, follow them on twitter etc.)
5) Do not trade until you have backtested a profitable strategy
6) Do implement the profitable strategy into code
This post is especially dedicated to the last two (mostly 5) which in my opinion will take you from being unprofitable to profitable very quickly...
There is a lot of talk about managing emotions in trading. And, yes that is important, but it doesn't have to be if YOU yourself never trade. If you program a bot to do it for you, you never have to learn this at all really. Granted, you have to learn programming, but the payoff is really high to do so.
Personally, I didn't start with the last two. I really wish I had.
Number 5 is the big one. It's extremely obvious, yet I happen to know that over 90% of traders are not using a profitable strategy they have backtested. Backtesting by the way, is simply testing your strategy against past market conditions.
If you haven't created any SPECIFIC strategies that are profitable, then you need to do that now before you place another trade. I have shared this chart as an example of a strategy that has been extremely profitable over the course of the past two years and would be very easy to implement into code.
The moral of the story or the tl:dr is this:
Don't place trades based on what you THINK will happen, place trades based on a strategy that has a positive expected value.
Thanks for reading,
-YoungShkreli
The baggy dead stock bounce strategy (works with crypto too)Hello,
let me present you: the baggy dead stock bounce strategy.
What is this strategy? Short version: Often, when a company has clearly died, has had months and months and years of downtrend, bad earnings, bad sales, bad everything one ofter the other, it does not reached the ground (where it belongs), but gets to the bagholder super strong hand area. And in that area, you might see some positive news. This gives a sliver of hope to iron hands bagholders, it is not rare to see stocks surge 200-500- here even 250,000% up!!! In a FEW DAYS!
The goods:
1- The price has kept going down, all the smart money has been out for a long time, there is no way any pro's are left, all that is left are dumb retail baggies that will never sell. Which makes it very unlikely that the price just falls 99% in 1 day or something like this.
2- Since the only people left is dumb money, well it's not even dumb money at that point, it's beyond... These baggies are NEVER going to sell. They will hold the bag to ZERO and beyond! So, since no one is interested in selling, any small demand can push the price up massively. Hundreds of percents.
3- Obviously, the massive returns for small accounts (even small accounts should risk a small % thought).
4- You do not have to worry about "wall street" competition for 2 reasons: First, the liquidity is often too small for them, Secondly and more importantly, there is no way anyone serious will be bullish on companies (or something else) like this, AND if a trader goes to a metting and tells people "Oh ye guys I am very bearish on this but I am going long today because reasons idk I just feel like it" and ends up taking a loss, this is a sackable offense and good luck finding another job (and maybe get a punch in the face too :p).
5- You do not have to worry about taking advantage of baggies false hopes and misery, these people are complete morons and you stepping in will not make them lose more money. Consider you increase their buy price by 20%. They are going then to buy a little higher and lose 100%. If you do not interfere they would buy lower and lose 100% of that... Literally makes 0 difference.
6- No risk of short squeeze like people shorting penny stocks...
7- You will have good laughs. I CRIED looking at this today and seeing the price remained at that 0.10$ level more than 10 years later, I swear I am not making this up.
Strong hands! They did not sell! Just a matter of time before this recovers now!
The bads:
1- Risky business of course... Be prepared to lose 100%. Obviously this is easilly countered by not going all in like a madman. You risk 100% of what you put in, but since it goes up hundreds of percent, your RR is high with a "stop loss" at 0.
2- You must make sure you do not overstay your welcome! So one must be good at knowing what people in this think (not much ;}), and understanding how momentum works.
3- Small. Very niche. Does not scale.
4- You would be a complete Vulture.
I do not trade this myself, I already watch plenty of markets and have 3 strategies (they all use the same tools and are similar but still that's alot), I can't add yet another...
So I do not know exactly how that will work, for those interested, play around with it see how you can do this. But from what I looked at and from what I heard, this works well. This is different from the penny stock educator scammers that go short after pumps.
Here for example on HMNY that made every one laugh last year:
Here, after dropping from 500$ to a few cents, Bitconnect did the same thing, as idiots bought, thinking "wow this is so cheap, what if it goes back to 500$ +1 million % returns". And what if your lottery tickets is a winner?
charts.cointrader.pro
AIG example:
A few more:
There should still be plenty of opportunities in crypto for the years to come because like it or not, crypto is full of idiots.
The SMA cross strategy In this educational idea I’ll cover the SMA cross strategy. I’ll will cover how it works, what my peripheral values are and how it can work for you.
The Simple moving averages cross strategy is a strategy where you buy something on a buy-signal of the indicator and sell it on a target, for example if you had 5% profit.
What is a moving average? A moving average is an indicator which helps you smooth out “noise” in a graph. The indicator is based on a formula you can find the formula below. You can add values to the indicator, let’s say you want a MA of 9 candles you just add a value of 9. You usually use more than one MA, I prefer using a 7 candle MA and a 25 candle MA. The thing I like on moving averages is that you can use them in any time frame.
What is a buy signal? A buy signal is created when the long moving averages (in my case the 25 candle MA) gets underneath the short one (in my case the 7 candle MA). When that happens a buy signal is created. When the opposite occurs it’s a sell order.
How to determine a target. Your goal is to make money, but how can you make as much money as possible with this strategy. You have to determine a goal, so an exit-position. Your exit-position is the hardest thing of this strategy, but you can use an average of what happened before. If the average of positive “breakouts” is for example 5% profit you can use 5% profit as target.
How to use a SMA strategy to make you money. Not all the SMA crosses will lead to profit, most of them are even false “breakouts”. So before you buy something on a buy-signal you have to wait a few seconds and watch what the price will do, when it goes up you buy, when it does nothing of goes down you do nothing. If you want to make money using this strategy you have to set a stop-loss, I recommend to always set a stop-loss not only for this strategy. You can keep your stop-loss really close to your buy order.
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Litecoin 20% Pump - What Now ? LTC/BTC Market OverviewHi guys, I wanted to study the Litecoin chart, because I think it's a really interesting coin to trade.
I will once again use my Bands Indicator , and will update later if I find any other good TA.
Previous analysis for Bitcoin here and for Ethereum here .
So let's dive into the High Timeframes :
4H
Trend is bullish for now. I don't see any bear signal yet. Price corrected a little after the pump, but the bears show a strong support.
2H
After the Bull Run, price managed to keep at this level, and is preparing maybe another move up.
1H
On the one hour chart, we get more details though. Price is narrowing and the short term trend is bearish. We will simply wait until price breaks through the upper or lower band to enter a trade.
Low Timeframes & DayTrade
15M
Here is the 15 minutes chart. Trend is going sideway but with a nice volatility that allow day traders to make nice profits.
5M
We finish with the 5 minutes chart. Here too some nice opportunities with some sideways action, today's trend was rather bullish with this huge candle at 4 pm.
Note: configuration on chart has been optimised for each timeframe. You can use it for your strategy.
Backtest for the for 4H strategy is shown below. I also did the backtest for the other timeframes.
You can get the Bands Pro Trader Indicator on my website .
Thanks for reading. I will appreciate your analysis too !
Week in Review: Hidden GemHonorable Mentions
Some very nice work has been done this week again by the Pine community. Shout out to Covax for publishing an attractive "Bitfinex Sentiment Index", beautifully rendering longs and shorts with some creative code; mortdiggidy's "Fisher Transform MTF" includes a unique function for the MTF Fisher, which, if I'm reading it right, solves the upper timeframe repainting that's oft associated with studies; and "Relative Derivative" by byteboi is a simple modification of the RoC that's comparable across assets and smoothed with an SMA.
Dr. Do-a-lot
A scripter that some, but not enough, users of TradingView will be familiar with is RafaelZioni. He's been a user for ten months and in that time he's amassed a huge library. RafaelZioni's strengths can be seen in the details of his work and as such his broader body of work may go underappreciated, but it's worth venturing deep into some of his work if you want to learn tricks-of-the-trade. His most recent work, and the script that will be highlighted this week, is "zigzag%".
Zig-Zags in the Bag
A very famous and useful scripter by the name of RicardoSantos has published a slew of scripts for realising zig-zags on the chart, so what make this one special?
Well, for a start (and as far as I can tell), the zig-zag paints in real-time and with no lag. It can also use upper timeframe data with (as per description) no repaint. But that's not where the value lies in this script.
A problem with Pine is that we can't realise some strategy functions in studies. TradingView doesn't accommodate for this and we need to think out of the box in order to achieve fidelity. So if you look carefully in this script you'll see that RafaelZioni has done just that. We can set the backtest date, set the take-profit levels, stop-loss levels and more. For anyone who's trying to turn their strategies into studies so that they can get alerts for each action, look here for some great insight.
The script is actually an implementation of a trading strategy too. Here's an example of some results you can get.
What Else is in the Bag?
It's a jungle out there, but there's treasure deep in the dark. I advise everyone to get down and dirty with RafaelZioni's scripts. There's a very RicardoSantos-feel from his ideas and I expect that they're only going to get more creative in the future.
His "Bollinger ratio" was included in the honorable mentions list last week and is a creative way of merging Bollinger Bands with the MACD.
The eloquently named "net volume of positive and negative volume buy and sell alert" is also a fantastic way to view volume, and it comes with buy and sell alerts.
Want to learn?
If you'd like the opportunity to learn Pine but you have difficulty finding resources to guide you, take a look at this rudimentary list: docs.google.com
The list will be updated in the future as more people share the resources that have helped, or continue to help, them. Follow me on Twitter to keep up-to-date with the growing list of resources.
Suggestions or Questions?
Don't even kinda hesitate to forward them to me. My (metaphorical) door is always open.
Honorable Mentions
RafaelZioni: www.tradingview.com
Covax: www.tradingview.com
mortdiggidy: www.tradingview.com
byteboi: www.tradingview.com
EDUCATIONAL STRATEGY 21>50>250 BUY, 21<50<250 SELLHELLO,
HERE IS A BEAUTIFUL MA STRATEGY,
HOW TO SET IT UP?
1. LOAD MA 21, Linear Weighted, HL/2 (Colour WHITE)
2. LOAD MA 50, Linear Weighted, HL/2 (Colour RED)
3. LOAD MA 250, Linear Weighted, HL/2 (Colour YELLOW)
SIGNALS.
1. MA 21>MA50>250 WE BUY, WE CLOSE WHEN MA 21MA50
Extra,
1. MA 50> MA 250 CONFIRMED UP TREND. GOLDEN CROSS. ONLY TAKE BUY SIGNALS
2. MA 50< MA 250 CONFIRMED DOWN TREND. DEAD CROSS. ONLY TAKE SELL SIGNALS
EARLY SIGNAL.
1. SELL EARLY: MA21 < MA50 ( BUT WE ARE IN UP TREND WHERE MA 50 > MA250)
2. BUY EARLY: MA21 >MA50 ( BUT WE ARE IN DOWN TREND WHERE MA 50 < MA250)
WHAT TIME FRAME SHOULD I USE? H1, H4, M15,M5.
What DO I DO WHEN 21MA=50MA=200Ma? DON't ENTER, WHAIT CONFIRMED TREND AND CROSS THEN ENTER.
WHAT PAIR SHOULD I USE THIS? ALL CURRENCY AND STOCK.
CAN I ADD ANOTHER INDICATOR? YES, ADD PARABOLIC SAR TO GIVE YOU BUY OR SELL SIGNAL WITH THIS STRATEGY.
IS THE STRATEGY BEST FOR TREND OR RANGE? BEST FOR TREND, USE M5 TIME FRAME FOR RANGE.
THANK YOU ALL, PLEASE LIKE IF YOU BENEFIT SO WE ADD MORE EDUCATIONAL TIPS.
ACCOUNT MANAGEMENT SERVICE
0096594072143 WHATS UP.
How to turn 100 dollars into 1 million in 926 trading days ?Hi guys, I wanted to share with you a strategy that I am using currently on one of my accounts.
The goal is to make this account growing with a target goal of 1 million USD without making any withdrawal.
I would call it "The turtle millionaire strategy" . Some of you probably use it or know it but some of you never imagine this possible.
YES if you are patient and disciplined you can turn 100 dollars into 1 million dollars.
How? By giving you the chance to grow your account slowly but surely.
Imagine that your daily average goal is 1% ? It is clearly something highly reasonable and possible with a $100 account because we actually use a minimum leverage of 0.01 lot which is actually 1K in reality.
An exponential strategy:
Day 1: $100.00 (1%) = $101.00
Day 2: $101.00 (1%) = $102.01
Day 3: $102.01 (1%) = $103.03
Day 4: $103.03 (1%) = $104.06
....
Day 50: $162.83 (1%) = $164.46
....
Day 100: $267.80 (1%) = $270.48
.....
Day 200: $724.36 (1%) = $731.60
.....
Day 300: $1,959.25 (1%) = $1,978.85
.....
Day 400: $5,299.42 (1%) = $5,352.41
.....
Day 500: $14,333.94 (1%) = $14,477,28
.....
Day 600: $38,770.63 (1%) = $39,158.34
.....
Day 700: $104,867.35 (1%) = $105,916.02
.....
Day 800: $283,646.65 (1%) = $286,483.11
.....
Day 926: $993,735.37 (1%) = $1,003,672.73 (MILLION DOLLAR BABY)
Being patient is the most difficult to follow this strategy and I give you below some steps to follow in order to reach that goal:
Step 1: Create a dedicated account for this strategy. It should be different from your main account. You must only use this strategy for this account.
Step 2: Deposit $100 on this account
Step 3: Your daily goal should be 1% of your growing capital. Of course you can do it using a scalping strategy but you can do it also with a few swing trades. At the end when you make your average performance it should be at least 1% daily.
Step 3 bis: Personally I use a swing strategy and identify only 2 to 3 swing opportunity per month. Those swing trades will give you high winning rates with minimum risks. For each trade I can expect hundreds of pips. Don't need to make scalping this way.
Step 4: At the end of the week or the month make a summary of your account performance including floating profit or loss.
Note: If you make withdrawals of your profit it will take more much time to reach the 1 million goal that's why I recommend to use a specific account.
Happy trading !
Comprehensive Trading Strategy - ConsensioDisclaimer: If you are primarily interested in copying other people’s trades then this is not for you. However, if you are willing to put in the work that it takes to learn how to trade for yourself then you have found the right place! Nevertheless please be advised that you can give 10 people a profitable trading strategy and only 1-2 of them will be able to succeed long term. If you fall into the majority that tries and fails then I assume no responsibility for your losses. What you do with your $ is your business, what I do with my $ is my business.
Identify Time Horizon
First and most important is identifying the time frame that you want to trade. I primarily trade the daily chart using Tyler Jenks’ Consensio. It was designed to capture long term trends. If followed it will ensure that you do not miss out on a trend and it will also get you out before it fully reverses.
“We want 90% of the cookie” -Tyler Jenks
There will be times when we cost ourselves a small amount of opportunity but that will be peanuts in comparison to the larger trends that will be captured.
Even though it was designed for higher time frames (TFs), specifically the weekly, it can still be used on smaller TFs based on your understanding and time availability. Decisions need to be made each time a candle closes, therefore you need to be available, or out of all positions, every time that happens.
I trade the daily chart because I know that I will be available every day for the candle close. I also like to trade the stock market, commodities, and FOREX as well as crypto because the daily closes are staggered throughout the afternoon and it gives me time to manage my positions.
If you prefer to day trade then this strategy can be used for the 1m - 1h candles. However it doesn’t seem to be too conducive to anything above 1h, if trading 24/7 markets.
For example: if trading the 4h then will not have enough time for position to develop before going to bed.
Regardless of what TF you select you can zoom out to determine longer term trends, however you should only use one TF for making decisions.
For example: I trade the daily chart and will zoom out to the weekly when I am looking for major reversals. However, if the price is signaling entries on the weekly then that is irrelevant because I make decisions based on the daily chart.
Identify Trend
“The purest form of Consensio is three Moving Averages without the price” -Tyler Jenks
Once you know what time frame you are going to trade then you need a reliable way to identify the trend. I have found Consensio to be the single most powerful tool for recognizing trends (as well as signaling entries, exits and reversals).
It is a system that seems very simple on the surface and potentially even unoriginal. However the deeper you dig the more you will uncover.
To start you need to go to the source directly:
Consensio - A New Trading System
Deep Dive Into Consensio
The notes that I have on it span well over 100 pages and I couldn’t possibly sum that all up in this post. Nevertheless I will attempt to cover the most important parts of the puzzle.
Important: Watch the videos above or else below will not make sense.
I have four subcategories for trending markets that are somewhat similar to Elliott Waves.
1) Short, medium and long term trend all in alignment. For bull trend: price > Short MA > Medium MA > Long MA (Strong trend)
2) Minor Correction (Small pullback moves against overall trend)
3) Major Correction (ABC type of correction that forms lower high but finds support at major boundary levels - Long MA, horizontal or trend line)
4) Potential Reversal (Price closes below long term MA and starts turning it over)
The moving averages should be dialed in to your specific time frame to help identify each subcategory above. When the asset is in a strong trend you want to see the Short Term MA act as support / resistance. A close above / below the Short Term MA indicates a minor correction. When there is a minor correction you want the Medium Term MA to act as support / resistance. A close above / below the Medium Term MA indicates a major correction taking place. When there is a major correction that doesn’t quite reverse the trend then you want the Long Term MA to act as support / resistance. A close above or below the Long Term MA indicates a potential reversal. If in a strong trend then expect price to quickly react from the Long Term MA and continue the trend.
For example: in a bull market the long term MA should act as strong support / provide a strong bounce. If it doesn't and the price closes below it instead then that is an indication that the bull market is getting exhausted.
When the Long Term MA starts to show signs of a reversal then I will add a Longer Term MA (default is 200) and / or I will zoom out to the weekly chart. This really helps me to understand if it is just a major correction within a market that is still trending or if a full on reversal is to be expected.
Being able to distinguish major corrections from reversals is the hardest part about consistently beating the market in the long run. Once you are comfortable with that then it mainly comes down to patience, discipline and diligence in regards to acting on signals and managing risk.
Entry & Exit Signals
5% when Price crosses Short Term MA (default is 4)
10% when Price crosses Medium Term MA (default is 9)
15% when Short Term MA crosses Medium Term MA
20% when Medium Term MA turns over (if it was trending down, then watch for it to turn up)
25% Price cross Long Term MA & Long Term MA flattens / turns over
25% Golden Cross with the Medium Term MA & Long Term MA
If multiple happens at once then sum the %’s.
For Example: P close < S & M MA then enter 15% .
If I am not in position then price crossing MA’s would trigger entries. If I am in a position then it would trigger exits. In rare cases I will flip my position by exiting a short and immediately entering a long, or vice-versa.
Entries and exits are done as soon as possible after the candle closes. I trade the daily chart so I will wait for the daily candle to close before making decisions and then I will try to make sure I get filled within 30 minutes (will take a market order if necessary). If you try to front run the candle close then you will make more mistakes than it is worth. It is very important to only make decisions after the candle closes. Everything else is noise and you cannot make decisions based on noise.
I may pass on signals if it would enter me against a longer term trend.
For Example: Price closes above Short Term and Medium Term MA’s and they cross over in a bullish manner. 30% - 50% long entry signaled. May choose to pass if Long Term MA is bearish.
I can completely pass on this entry in favor of waiting for a short if the price is below the Long Term MA and the Long Term MA is in a strong bear trend. In this case I will expect Long Term MA to act as strong resistance and will wait for price to close back below shorter term MA’s to trigger a short entry.
It takes time to reverse a trend. In the above example the Long Term MA is in a strong bear trend while price appears to be rallying through it after 50% long entry is signaled. I would pass on long entries and be very confident that the price isn’t going to blow right through my Long Term MA (due to the downward angle).
It very well might reverse the trend, however that will take time. If the price is above a Long Term MA that is angled down then the MA will act as a magnet for the price until it flattens / turns over.
Passing on the first long entries that are signaled does not mean that I will pass up on it all together, it just means that I think it is too early / risky. I would strongly prefer to wait for a golden cross with the Long Term MA flattened, or angled up, to go ahead and fully enter. In the example above I would wait for a pullback to the Long Term MA. If it supports above and gets a golden cross with the Medium Term MA then I would be much more inclined to take that entry.
It is very important to understand the difference between opportunity cost vs capitalizing on a loss. As traders we need to be completely comfortable with missing out on opportunity and extremely diligent about avoiding / minimizing losses. Therefore it is okay to pass on possible entries that are less than ideal however it is not okay to pass up on exits that feel similar.
Stop Losses & Risk Management
I determine my position size and leverage based on the amount of risk that I would be assuming. If an entry is triggered then I will use the Parabolic SAR or the Bill Williams Fractal to determine my risk.
If SAR is too tight then I will use the Fractal. I use the medium and long term MA’s to determine what is or is not too tight. Prefer stop to be above long term MA but has to be above medium MA.
I am trading Consensio, and it does not allow for stop losses in this manner. Instead it demands that you hold onto a position through the candle close and that you scale out in pieces (see above 'Entries & Exits'). This is best in 99%+ of the time.
However that really limits the leverage that can be used. If trading the daily chart 3X - 5X would be the absolute max. I tend to prefer 5X - 10X leverage for a number of reasons:
-Minimizes exchange risk
-Can minimize slippage
-Still gives me plenty of flexibility to place stop above prior Fractal / SAR
Below shows an example entry triggered and my thought process for where to place the stop along with a risk / leverage calculation.
Once I understand the risk, then I can calculate the position size. You should always think of risk as the amount you stand to lose opposed to exposure amount. I do not care about the exposure amount. I care about how much I stand to lose... how much I am risking. I care about controlling my downside and limiting it to less than 2% of my trading capital.
In the above example the risk is 7.10% and the max leverage is 14.08%. I never use the max leverage because getting liquidating comes with significantly higher fees. In this case I would use 10X or less leverage and I would make sure to set a market stop loss below the liquidation price.
If you get liquidated then it will likely be a ~22% fee. If you take a market stop before the liquidation triggers then it will be a ~2% fee.
I currently like to cap my risk at $500 per trade. $500 (USD I wish to risk) / 0.071 (calculated risk based on wick above Fractal) = $7,042 (exposure)
$7,042 is my maximum exposure. With 10X leverage $704.20 is the most I will need for margin. Once I understand my position size, leverage and margin requirements then the position size can be easily calculated based on the Entry & Exit Signals above.
Trailing Stop Losses
I consider myself 100% entered when I have $500 at risk. If the price moves in my favor then I will trail the stop loss. If I trail it to the point where it is at break even, or better, then I will not consider myself fully entered anymore.
Even though I still have the full original exposure, I am no longer assuming any risk and the latter is all that matters to me. Therefore I would feel comfortable adding to my exposure up until the point where I am risking another $500.
In the example above we get a great entry before a strong trend starts (also happened to follow descending triangle breakdown which provided great confirmation). The price quickly moves in our favor to the point where the stop is adjusted to break even, or very close to it.
With no risk I do not consider myself to be fully exposed anymore and I feel comfortable adding to my position up to an amount that would risk $500. Need to be very careful with this because adding to a profitable position after a big move can completely ruin your trade.
I will use the TD’ Sequential , RSI and Average Directional Index to confirm that the trend still has room to go. I will also check horizontals and trends to make sure I’m not selling support / buying resistance. In the example above I would really like adding because all of the above are in my favor.
This can be thought of as manual unbalancing which is the opposite of how most people approach allocating capital.
Automatic rebalancing will sell the most profitable positions and add to the lesser profitable positions in order to keep the same allocation percentages.
For example: if allocations are 50% Apple and 50% Amazon then Amazon outperforms. It will be something like 45% Apple and 55% Amazon. Rebalancing would sell Amazon and buy Apple so that it is 50:50 again.
I have always thought that is completely backwards. I want to allocate my capital to the best performing assets. If I am in a position that is really moving in my favor then I am thinking about adding to it. I would never take away from a more profitable position to add to a lesser profitable one just for the sake of balancing my portfolio.
Conclusion
What is outlined above is enough to ensure that you do not miss out on a trend and it also ensures that you will get out before it fully reverses. Don’t take me word for it, go do some backtesting yourself. That is when the power of Consensio will really come to life.
When trying out a new strategy I always recommend to start with an extremely small amount of money that is > $0 and I also recommend zooming in.
I think that it is very important to have some skin in the game so that you feel the pain and pleasure of losing and winning. However I think that is should be very nominal. If you have a $10,000 trading roll then I would take $100 and trade the 3m chart. Focus on learning the intricacies and making sound decisions. Also focus on ROI and how long it takes to generate 10%, 50% or 100%+ returns opposed the dollar amount being returned.
Regardless of what time frame you decide to trade I would always start with a very small TF. The reason is that the daily / weekly charts could take years to teach what the 3m and 5m charts can teach in days.
The decision making process should be exactly the same regardless of the TF. There are a ton of variables and intricate situations that you can put yourself into by trading small TF’s. Thinking your way through these situations is how you internalize and gain confidence in the trading system as well as the decision making process.
Facing these situations before you have significant money on the line is what I consider batting practice.
“We don't rise to the level of our expectations, we fall to the level of our training.” -Archilochos
After a couple weeks of trading the shorter TF’s I felt comfortable putting significant money to work on the Daily chart. However, I consider myself a fast learner and that process could take longer for others.
How I trade ALTs?My Personal Alt Trading Strategy
Bitmex trading takes up most of my time and hence, I do not get enough time to TA Alt Coins.
Now, Bitmex is profitable, but just to scatter my risks, I ventured back into ALT Trading last month probably after a gap of 6-7 months.
I came up with this indicators based ALT trading Strategy that I'm sharing with you all here.
I use two indicators, namely ->
1. FOMO Momentum Scalper
This is the leading indicator I use for this trading strategy. I created it a couple months ago and is available for FREE on TradingView
2. FOMO Buy_Sell_Indicator
FOMO is being used in this strategy as a confirmation of trade tool. FOMO makes up for a big percentage of my Trading Decisions in any sort of trading. Unfortunately, it's not free. It's not really required if you can perform some TA or rely on some other indicators for confirmation.
The links to both the indicators are at the bottom of this Idea.
The Strategy
1. I've created a TradingView watchlist of decent to high volume Alt Coins.
It shouldn't look like this on 1hr timeframe.
2. Added FOMO Momentum Scalper (Free) Indicator to my chart.
3. Added FOMO to my chart.
4. Choose 1hr Timeframe and go through the watchlist probably 6 times a day, every 4-5 hours.
5. Wait for a Buy Signal from FOMO Momentum Scalper. Looks like this.
6. Set an Alert for FOMO 1hr Buy Signal on the coin with FOMO Momentum Scalper Buy Signals.
You can add an extra layer of confirmation if you want like FOMO HTL 1hr Crossover. I'm currently running with just 1 confirmation.
Once the Alt Coin you are looking at has crossed over HTL comfortably (consolidating and HTL has started moving up), you can say that that coin is bullish on 1hr Timeframe.
Problem is, with more confirmations, your profit factor on a trade will reduce. As most of the time, while waiting for a confirmation, you'll lose out on initial profits.
For example in this case
9. I find the previous structural LOW and stagger to that low followed by a SL behind that low. I'm mostly running with a fixed percentage for my TPs instead of finding previous structural highs for TPs.
Since, Binance doesn't let you add TPs n SLs at the same time, I'm using 3commas to add SLs, staggers and TPs at the same time.
10. Then, I set up the trade in 3commas and leave it until I come back to the charts. If I see that a couple of TPs have been filled and if there is a reason to let it run, I let the trade run or if it isn't looking good and a couple of TPs have been filled, I close the trade in profits. This is not a bot trading. It's completely manual. There is no point in letting a profitable trade to come back in negatives when the charts have started to become bearish.
Sometimes, I move my SL well in profits for example at TP1 or TP2 and let the trade run if it seems a bit bullish with very little bearishness.
11. Rinse/Repeat. I strictly follow the rules I've set for myself. I do not run around messing with my trades if I'm in profits or even in loss. Let the trade takes it course.
Examples
1. This trade went in other direction. Looking at the chart it was clear AION is downtrending but could be getting very close to reversal. Now I zoomed out and noticed that there is a possibility of Double Bottom. I decided that will be my stagger in case the trade doesn't go in my direction initially. And if it breaks double bottom prospects, it's obvious that it'll keep dropping/downtrending. So, there won't be any point of chasing it in case it doesn't double bottoms.
I set my SL a little below the double bottom and kept my last stagger at the double bottom.
AION ran 9% soon after. Proved to be a good profitable trade in the end.
2. Similar to 1. After running 3-4% a couple times, forming new lows (higher lows) this trade finally ran 9-10%
Prospects of double bottom. Placed Staggers carefully. Staggering, proper risk management paid off in the end.
3. Couldn't find any immediate structural low except one before previous short term uptrend as shown in the chart.
Hence, used that as a possible last Stagger and SL behind it
Looking at the chart, one cannot find any possible reason to close the trade just yet considering, we would have the best possible entry in the trade.
Improvement
I would be keen to know if there is another indicator/timeframe that you've tried with this strategy or made any improvement to it.
I've traded with this strategy for a while now. It works just the same on longer timeframes. For example on 4 hourly and daily.
Let me show you some examples
Comprehensive Trading ProcessDisclaimer: If you are primarily interested in copying other people’s trades then this is not for you. However, if you are willing to put in the work that it takes to learn how to trade for yourself then you have found the right place! Nevertheless please be advised that you can give 10 people a profitable trading strategy and only 1-2 of them will be able to succeed long term. If you fall into the majority that tries and fails then I assume no responsibility for your losses. What you do with your $ is your business, what I do with my $ is my business.
Consensio: (King) 5% when Price crosses Short Term MA | 10% when Price crosses Medum Term MA | 15% when Short Term MA crosses Medium Term MA | 20% when Medium MA turns over | 25% Price cross Long Term MA & Long MA flattens / turns over| 25% Golden Cross
Patterns (Queen): Favorites: hyperwaves, parallel channels, descending triangle, head & shoulders, Wyckoff’s, double bottoms & tops, flags | Least favorite: symmetrical triangle
Horizontals (Rook): Horizontals > trend lines
Trendline (Bishop): Very powerful when used in combination with Consensio. One of my favorite setups is a trendline break alongside a reversal in Consensio.
Parabolic SAR (knight): Best tool I have found for setting / adjusting stop losses. Can also be used as no trade zone. For ex: if wanting to go long and SAR is bearish (above price) then could / should wait for SAR to break before entering.
BTCUSDSHORTS (pawn) : If shorts are at / near ATH’ levels then I do not want to be short and will actually have a bias for going long.
Funding Rates (pawn): Helps me to understand supply / demand. When shorts are getting expensive then I expect a short squeeze to be around the corner.
Contango / Backwardation (pawn): Not a timing indicator. Is used to determine bullish / bearish bias and can help to identify tops / bottoms / support and resistance. Watch the video series and Google “Ugly Old Goat Backwardation” to learn more.
TD’ Sequential (pawn): “The trend is your friend until it’s about to end” -Tom Demark | Used to identify when a trend is becoming exhausted which can be very helpful to confirm or deny an entry. Ex: if wanting to go long on a green 7/8/9 then would strongly prefer to enter on correction that is expected to follow.
Average Directional Index (pawn): Used to identify when trends are becoming exhausted. When ADX’ reaches resistance / ATH levels then it is likely that the trend is reaching a point of exhaustion
Ichimoku Cloud (pawn): Starting to use traditional settings across the board. Crypto settings seem to make the cloud useless when markets are volatile, whereas the traditional settings seem to line up nicely with the MA’s I use for Consensio.
Price Action (pawn): Helps me understand when markets are overbought / oversold in the short term. In my experience it is very rare for Bitcoin or Ethereum to move more than 10% in 24 hours. Therefore if I am wanting to enter long and the price is + > / = 7% in the past 24 hours then I will be very cautious and usually wait for a pullback / consolidation.
Bollinger Bands (pawn): Very helpful for recognizing when a trading range is coming to an end, which can be very useful for spotting trends that are just starting / about to start. Also like the Bollinger Band % to help illustrate extremes.
Relative Strength Index: Divergences can be very useful for understanding short term price movements and potentially full on reversals. When markets are moving I like to check the RSI on the 1h and 4h charts and pay close attention to divergences as indication that a trend could be exhausting.
Stochastic Oscillator: Very useful in trending markets that have not gone parabolic. Can be helpful in ranging markets as well, but not nearly as much. Can get some very good signals on the 3d chart. If there is a buy / sell signal then I think it is best to wait for %K and %D to cross the boundary lines before considering it significant.
Hierarchy of Indicators
The best traders know which indicators are most important at which times. A trader is like a carpenter and the indicators are akin to his toolbelt. Through experience he or she knows which ones to reach for, exactly how they are used and what adjustments could be required for a specific circumstance.
It is one thing to understand that an MA rolling over is an indication of a trend reversal. It is entirely another to fully believe it and be able to act on it. Next is understanding which indicators can be disregarded at which times and which should always be taken into account.
Above lists my indicators by order of importance. However that is only a default and it will change based on market conditions.
For example: if a hyperwave is present then patterns become more important than Consensio and trendlines become more important than horizontals. If market is parabolic then I find the Stochastic useless and will adjust the settings on the RSI to 30. If no trend is present then the Bollinger Band can go from a pawn to the King.
It would take much too long to go into all of the different variables I can think of and how it can change the hierarchy of indicators. What is important is that you start to develop the feel for it yourself. The only way I know how to do that is through checking all of them on a regular basis, in all different types of markets (bull, bear, flat, parabolic).
Learn -> Practice -> Fail -> Learn -> Practice -> Understand -> Apply -> Internalize -> Believe -> Achieve -> Fail -> Learn
Monthly, Weekly & Daily Processes
Daily
Check daily close every day. If entry or exit was signaled then make sure to get filled within 30 minutes of close. If passing on an entry signal then notate why. Never pass on exit signal.
Update trading ledger to reflect any changes (I will be posting my results in the 2 > 20 Bitcoin Trading Challenge).
Go through the TA Process listed above on a daily basis (I post my analysis in the Bitcoin' Daily Update).
Make sure that you are highly focused during the candle close otherwise the mistakes will compound. I prefer to go to the gym on a daily basis and be disciplined about my diet in order to maintain a high level of focus. I have also committed to a daily hot springs meditation session that has proven extremely valuable over the past year. For anyone that watches Mr. Robot think of Tyrell Wellick chopping wood while confined by himself in the forest. Having a task that is repeatable on a daily basis provides balance, perspective and focus.
I find a consistent sleep schedule to be vital in my performance as a trader. I make sure that I am in bed by a certain time so that I wake up feeling refreshed / energized and ready to trade.
Weekly
On Sunday I will analyze the weekly chart instead of the daily chart.
Trading ledger that gets updated daily is used for weekly PnL statements which get done on Saturday morning instead of preparing for traditional markets to close. I keep an excel spreadsheet for each exchange I trade on and include sections for Date, Entry, USD Inventory, BTC Inventory, Withdrawals, Delta, PnL, Unrealized PnL, In position.
When I first got into crypto I completely disconnected from my friends and family. To ensure the first doesn't happen again I commit to two social activities per week and for the latter I commit to calling my mother every Sunday.
Monthly
Review biggest trades from prior month. Dissect entries, exits and position sizes. Everything should be repeatable / explainable in hindsight. If it isn't that means I didn't stick to the guidelines and that is mistake. I cannot expect to be a perfect trader, however I can expect to learn from my mistakes.
Monthly Best & Worst Dressed List. After reviewing the trades find the best and worst examples. Print out the charts, notate why they made the list and put them in a binder. In the short term, how I trade is exponentially more important than how much money I make or lose. Therefore if the monthly PnL was subpar but very few mistakes were made on the worst dressed trades then I consider that a huge success and will expect the variance to even out in the medium - long run.
Weekly PnL statements is used for monthly PnL statements
-It feels really good to make a lot of money and it can feel very frustrating when results do not meet expectations. This is why I believe that is it vital to focus on the process and improving instead of the results. A few good results could be the byproduct of luck. One good / great process will lead to sustainable results as long as you can remain disciplined / diligent. While some may prefer to be lucky rather than good I strongly prefer to put in the effort that it takes to be good. Furthermore luck seems to be attracted to those who put in the consistent effort. Nevertheless I still track short term results because I have bills to pay. Eventually I would like to only pay attention to annual results.
“So you want to be a carpenter, do you?
Well it takes more than a hammer, boy, you're gonna need blueprints and a will to build, and
Straighten your cap! you look like you've been through a war.
Wipe that grin off your mug, you got a sturdy frame?
Sluggish posture just won't cut it.
You're gonna need schooling, and, and, and take notes!
And god if I catch you yawning again you're gonna regret ever asking for my help,
And dammit you gotta hustle, this is a slacker-free zone
And, where's my pencil? go get your hard-hat,
here's a nickel, go get us a ruler and a saw and a drill and lots of graph paper!” -Aesop Rock
How To Read Charts (Sec. 2) Mastering Reversals, Trends & RangesHey Traders, Here is Section 2 of the "How to read structure (Charts) Tutorial". In this Section, you will learn some of the methods that professional trend traders use to bring home a profit week after week, month after month, & year after year! In this Section, I will be explaining-
- The Characteristics of a healthy trend (Chart 6)
- A simple method that makes identifying trend reversals easy (Chart 7)
- Why you should not rush your trades plus when & why you should have a neutral biased as a trend trader (Chart 8)
- Mastering Reversals & how to trade them properly (Chart 9)
- Continuation of GBPUSD Structure Analysis ~ How To Identify & Avoid Trading Ranges To Improve Your Trend Trading Strategies ~ The Importance Of A Candles Closing Price. (Chart 10)
- One of my trend trading rules to avoid trading ranges & Intro to the 1st part of Section 3. (Chart 11)
Section 1 of this tutorial is linked below. Please start with section 1 as it will lay some of the ground work for this section & will also show these methods on actual charts. This section of the tutorial is a breakdown of the methods taught in section 1 and when studied together, can really give you a good understanding of how trends, reversals, ranges etc work. Please feel free to leave feedback below regarding if these tutorials have been helpful. I will be releasing many more of these tutorials in future ideas and your feedback really helps me to improve them! It may take you a couple minutes to get use to the format of these tutorials so take your time & read over the charts multiple times as there is a lot of good information provided within these tutorials.
Chart 6- Characteristics of a healthy trend
Chart 7- A simple method that makes identifying trend reversals easy
Chart 8- Why you should not rush your trades plus when & why you should have a neutral biased as a trend trader
Chart 9- Mastering Reversals & how to trade them properly
Chart 10- Continuation of GBPUSD Structure Analysis ~ How To Identify & Avoid Trading Ranges To Improve Your Trend Trading Strategies ~ The Importance Of A Candles Closing Price.
Chart 11- One of my trend trading rules to avoid trading ranges & Intro to the 1st part of Section 3.
You Have Completed Section 2 Of The "How To Read Structure (Charts) Tutorial. Charts 6-11"! Thank you for taking the time to finish this section of the tutorial! I hope Section 1 and 2 have been helpful to you! In section 3, we will start looking at how you can use price action/structure & the methods taught in this tutorial to design your own trading strategy! After all of the sections are complete, you will have the tools needed to read structure, create your own rules based trading strategy and much more so please stick around as this is only the beginning of a very educational tutorial. Thanks Traders!
The Famous Risk/Reward Myth If you have been trading or interested in trading for some time, I am sure you have heard some online "teachers" say that you MUST have a 1:3 or 1:5 R/R in order to be profitable.. That is absolutely FALSE! If you hear a "professional trader" say that, odds are they are not truly a trader.. A professional trader understands that R/R & win % are correlated. The higher the R/R, the lower the win %, The lower the R/R, the higher the win %.. Determining an appropriate R/R should be decided based on your strategies performance (derived from backtesting different targets/stop losses) as well as your psychology. In other words, R/R and win % should be viewed as one metric, as they MUST work together in order for you to be a consistently profitable trader. As for the psychology aspect- are you a trader who can lose 70 out of 100 trades so long as your making money? I personally prefer to win 60-70% of my trades but that decision is up to you. The important thing is that you balance these two metrics to ensure profitability while catering to your psychology to maintain confidence in your strategy. There is no right or wrong in trading, only what works and what doesn't! If you are not sure what Risk/Reward or Win % is, please see below-
Win %
Win/Loss Ratio also referred to as Profit/Loss Ratio
What Is Risk/Reward?
Risk/Reward is a used by traders to determine how much capital they are willing to risk in order to make a desired reward. For Example- lets pretend you are using a trading strategy that has a 1:1 R/R & you are risking $10 on each trade. A 1:1 R/R would mean that you are risking $10 to potentially make $10. Using this same example with a 1:2 R/R, You are risking $10 to potentially make $20. For a 1:3 R/R, You are risking $10 to potentially make $30 and so on. In order to successfully make a profit with a 1:2 R/R, the market has to move twice as far to hit profit targets than it does to hit your stop loss. In order to successfully make a profit with a 1:3 R/R the market has to move three times as far to hit your profit targets than it does to hit your stop loss & so on.. By default, the further price has to move to hit your profit target, the less likely it is for the trade to be successful, ultimately lowering your win %. With that said, it is important to note that a lower win % does not necessarily mean the strategy is more or less profitable than a strategy with a higher win %. Lets look at some examples below:
Example 1- You are using a strategy that has 1:3 R/R and a 30% win %.. In this example we are going to look at 100 hypothetically trades.
70 losing trades at $10 each (70 x $10 = -$700)
30 winning trades at $30 each (30 x $30 = $900)
Net Profit/Loss = $200
Example 2- You are using a strategy that has a 1:1 R/R and a 60% win %.. Again based on 100 hypothetical trades.
40 losing trades at $10 each (40 x $10 = -$400)
60 winning trades at $10 each (60 x $10 = $600)
Net Profit/Loss = $200
Looking at the examples above, we can see that both strategies made the same amount of money even though one strategy wins 30% of trades, while the other wins 60% of trades! Of course there are small variations to the examples above as not every strategy with a 1:3 or 1:1 R/R will have a 30 or 60% win/loss ratio however the overall concept stands and should be taken into consideration whenever developing or trading ANY strategy.
In my last tutorial- " Simple Patterns Tutorial, The Correct Way To Trade Double Tops " I asked you all to vote on which double top you thought would perform the best out of the 3 common double top formations shown above.. Each top received votes however, top # 2 received the most votes. The answer to this question may have surprised you however, it will be highly beneficial to your trading!
As always I hope this was helpful, the information shared in this educational post regarding risk/reward is an extremely CRUCIAL aspect of risk management and remaining consistently profitable so be sure to read over everything multiple times if need be. Please give this a thumbs up if it was helpful and you would like me to post more material regarding risk management. Also feel free to comment below or message me with any questions you may have.
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HULL Moving Average StrategyThis is my strategy based off the Hull Moving Average, created by Alan Hull.
www.fidelity.com
The HMA is extremely fast and accurate in determining price reversals - I exploit this quality and add the ability to select a granular TimeFrame to use for the HMA calculations (ranging from 1m to 1D). The HMA can be painted on any TimeFrame. When the HMA indicates a price reversal, the strategy waits for the current candle to close before entering a trade.
Target profits and losses can easily be set, as well as: Leverage, % to risk per trade, trailing stop entry point, trailing stop offset, Spread, Commission, and more!
The indicator works on any currency pair (excluding metals) and as low as the 5m timeframe.
Simple Patterns Tutorial, The Correct Way To Trade Double Tops In this short tutorial, we will look at the three most common Double Top formations along with how to properly trade them and when/where they typically appear on a chart. Double Tops work very well as trend continuation patterns for the obvious reason that you are trading with the underlying trend (strength) in the market however, Double Tops can also be a great tool for identifying and trading trend reversals. I do not recommend trading these patterns as reversals at every support or resistance level, as trading this way will most likely not be a consistently profitable trading strategy. One method to trading these patterns as reversals is to use higher timeframes to identify important price levels.
For Example- You may use the Daily chart to identify important support/resistance structure levels while using the 1hr chart to actually identify and trade the double top itself.. Every strategy should have something called conditions and criteria's for entry.. If you follow my work, you have heard me say this in the past. In the case of this example, A daily level of structure Support/Resistance would be our condition and a double top on the 1hr chart would be our criteria for entry.. You rules should state this:
Condition:
1) Price must retest a daily level of support or resistance in order to look for entry criteria.
Criteria:
1) After price has retested a daily level of support/resistance, I am allowed to look for a double top
entry on the 60 minutes timeframe.
-See example of this exact trade at bottom of description (Chart 4 and 5)
Chart One: Most Common Double Tops
Chart Two: Examples Of Double Top Reversals & Trend Continuation
Chart Three: Double Top Trade Examples
Chart Four: Daily Retest Of Support/Resistance:
Chart Five: Double Top On 60 Minute Timeframe:
Often, you will notice that price is up-trending on the daily chart but down-trending on the hourly charts. Many traders get confused regarding how to handle this confliction of trend.. One way to handle this is by doing what is stated above. Use a higher timeframe like the daily chart to find important price levels, and use a lower timeframe like the hourly or minute charts to trade at these levels. Just because the daily trend is up does not mean we cannot trade a double top reversal on the 1hr chart as that timeframe may be down-trending in a perfectly healthy daily uptrend.. I hope this was explained clearly, please feel free to ask me any questions
you have in the comments below or via private chat & I will be happy to help. Also please let me know what double top you think is the best to trade (see chart 3) in the comments below. I will do a follow up lesson to answer this question I am asking you. I think the answer may surprise you & know it will be a AAH-HHA moment in your trading journey!
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