LATEST: My Position Trading Strategy & System (Version 2)




Kindly read in conjunction with my Intraday Trading Strategy & System (Version 2).

Trading Rules

1. This is an intraday trading strategy adapted for trading using the H1, H4 and even Daily charts. The indicators you will need are as follows:

==> super_signal_v3.mq4 (used for alarm feature and for discretionary TP; NOT to be used for new trade entries!)
==> Pivots_Weekly.mq4 (do not use this on Daily charts!)
==> Pivots_Monthly.mq4
==> b-clock_(h-m-s).mq4
==> Volatility.Pivot.mq4
==> PriceChannel_Stop_v1[1].2.mq4

2. Determine bias by observing the week's opening price relative to the weekly pivot point. If price opens ABOVE the weekly pivot point, then bias is bullish/long. If price opens BELOW the weekly pivot point, then bias is bearish/short.

3. Determine additional bias by observing the month's opening price relative to the monthly pivot point. If price opens ABOVE the monthly pivot point, then bias is bullish/long. If price opens BELOW the monthly pivot point, then bias is bearish/short.

4. Confirm bias by observing price relative to the volatility pivot line. If price is ABOVE the weekly pivot point AND is also ABOVE the volatility pivot line, then the bullish/long bias is strong. If price opens BELOW the weekly pivot point AND is also BELOW the volatility pivot line, then the bearish/short bias is strong.

5. The BEST entries for new trades are located within a zone (sweetspot) 20-60 pips wide of any given pivot line (Weekly or Monthly PP, S1, S2, S3, R1, R2 and R3). For longs (buying supports), ideally entries should be made 'at' to 60 pips above any given pivot line. For shorts (selling resistances), ideally entries should be made 'at' to 60 pips below any given pivot line.

Note:
  • If price is at PP, watch for a move back to R1 or S1.
  • If price is at R1, expect a move to R2 or back towards PP (shorts outperform longs approx. 58% to 42%).
  • If price is at S1, expect a move to S2 or back towards PP (longs outperform shorts approx. 56% to 44%).
  • If price is at R2, expect a move to R3 or back towards R1 (shorts outperform longs approx. 83% to 17%).
  • If price is at S2, expect a move to S3 or back towards S1 (longs outperform shorts approx. 83% to 17%).
  • If there is no significant news to influence the market, price will usually move from P to S1 or R1.
  • If there is significant news to influence the market price may go straight through R1 or S1 and reach R2 or S2 and even R3 or S3.
  • R3 and S3 are a good indication for the maximum range for extremely volatile days but can be exceeded occasionally (at R3, shorts outperform longs approx. 97% to 3%; and at S3, longs outperform shorts approx. 97% to 3%).
  • Pivot lines work well in sideways markets as prices will most likely range between the R1 and S1 lines.
  • In a strong trend, price will blow through a pivot line and keep going.
  • Once support or resistance is broken, the level in question becomes its opposite, i.e. former support becomes resistance and former resistance becomes support.

** It is important to understand, however, that these are probabilities and not certainties.

6. Wicks pricking through pivot point levels do not constitute a valid entry. Unless the move past a pivot point level is convincingly rapid, it is advised to enter a new trade only upon the 2nd candle that has its body past the pivot point level.

7. Stop-losses (SL) though highly recommended are not an essential part of the trading strategy, for if Trading Rules no. 5 & 6 are strictly observed... any unprofitable trades will be immediately closed when the opposite entry signal is observed. However, should you require a SL... the recommended level is 40-60 pips (and preferably on the opposite side of pivot point level to your entry).

8. Unless you trade one (1) lot at a time, it is advised that you split your entries into at least two separate trades.

9. Pursuant to no. 8, the way of exiting trades shall also be split... i.e. one shall be based on your discretion, and the other shall be decided by the market (via the use of the Price Channel Stop or a wide trailing stop about 40-60 pips away). In general though, the TP level should be the nearest resistance if buying support and the nearest support if selling sesistance. (Note: The volatility surrounding the major USD-crosses have resulted in trades frequently being stopped out, be it for a loss, break-even or prematurely when in profit... far short of its eventual reversal point. I've been tinkering with a few exit strategies and was advised by an institutional trader friend of mine to utilise a volatility 'filter'. Since I do not have access to his multi-million dollar setup, I found the use of the Volatility.Pivot.mq4 to be helpful. From what I understand, despite its name, it is actually based on the ATR. I'm still in search of a more 'concrete' volatility filter. Until then, this is what I'll be using.)

Well, that's it in a nutshell. Please feel free to review the trading logs posted here to further familiarise yourself with the strategy... and remember, practice makes perfect. Should you require further clatification, you'll most probably find me here (http://www.ircforex.com/chat/) most weekdays.

2 comments:

WeeTrader said...

Have yet to trade with the 'PriceChannel_Stop_v1[1].2.mq4' indicator... Looks interesting, would that indicator be used to trail a SL?

Blogger said...

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