Survival Of The Strongest Trading Method

Survival Of The Strongest Trading Method

This is my personal trading style which provides me bread and butter provider. So I know it will do the same for you. So keep reading it again and again until you can clearly see what i mean to say.

Some trading knowledge before we begin. Do not skip it.
1. As the name suggest market always move in the direction for the stronger player. So the more stronger the market participants, more likely the trade will move in their favor.
2. The market can have both strong buyers and sellers at the same time so one sided analysis should never be done.
3. Do not let your EGO, FEAR, GREED come in between you and profit.

So keeping the above points in mind lets continue.
Few years back indicators were trending and every trader started using them then the trend currently shifted to price action and people are having high hope for it.
The truth is, whatever you use, if you know to trade you will make money. For people who think trading should be complex they them-self make it complex and similarly people use simple trading approach and still makes money. So ultimately making or losing money is simply my own choice.
I personally believe trading can be very simple and can have a fixed set of rules to overcome the market. Thus this method is made which gives me about 70% accuracy in any time-frame and market. But the more practice you will do the more accurate you will be. For a new trader the accuracy should lie between 50-60%.
As the risk-reward ratio is between 2 to 4 for every trade, i have a lots of trade to chose from and trading very few trade a month generates a decent profit.

Trading method is completely discreet and can be traded manually as well as can be easily converted into a EA. Choice is yours. I made using EA Builder without coding.

Next post: Market analysis.

Market Analysis

To analyse the market I use to indicators keeping in mind how price moved recently before my indicator indicated something.
First indicator is use a simple Stochastic(14,3,3) oscillator. The parameter are not fixed. You can adjust the sensitivity and thy will provide you with more as less data as per you need.
Next indicator is just a 10 period EMA. Most of the time it is useless but still i love to put it.

Why I use stochastic oscillator ?
There are lots of indicators to chose, and still i chose stochastic as my indicator. Many people will be thinking by this point that my trading style has something to do with divergence kind of thing. But believe me, i don't know how to trade divergence.
Stochastic is a very simple indicator which says and taught by all teachers that buy at oversold and sell at overbought. This is undeniably true but unless we can filter the trade properly we will in wrong side of the market in maximum of the time. And oscillator always help us to enter early into the market.

To go into depth have you ever wondered, what is oversold or overbought ? What do they signify about the traders and market ?
Over bought means the market is continuously buying for a long time without any pullback. Which also says our buyers are so strong that sellers are not able to enter to make any pullback.
The opposite is true for oversold, where the market is selling for long time or sellers are strong.

This thing we have seen many times that the market remain in oversold or overbought for a long time and continue to grow further giving us evidence that the market is in strong hands. And the strong survive.
Below image is a random snapshot of market with indicator setup.
Next post: How to read market.

How to read the market

By looking at the snapshot of the previous post you might be thinking the technique only works on a trending market, but the truth is it works on all market. Yes in trending market it is easier to spot the trade. You can test it on your system easily as we proceed.
So without wasting more time let discuss more.
If you remember the highlighted text in previous post, you should understand that
1. When buyers are in control they cause overbought to occur.
2. When sellers are in control, they cause oversold to occur.
Don't forget the above lines.
I chose stochastic for another reason as it has two oscillating lines which also cross and reverse before actually reaching into a overbought or oversold area. This gives more details about the market. And sometime the oscillator will not enter the over area but reverse before it. But still we can enter the trade while looking at the cross of the oscillating lines.

In the below image, you can see i have marked 15 region over the oscillator and the same thing over the candles. Let analyse them.
Before starting analysis you should remember that people who trade in the direction of one time frame higher takes less trade but get high probability trade. So you can always apply the same rule over your higher time frame to determine the direction and come down to the lower time frame to get a better entry if you are interested.

Rules:
1. When buyers are strong and sellers are week we buy at oversold as the oscillator leaves the oversold area and price close above the 10 EMA.
2. When sellers are strong and buyers are week we sell as oscillator leave the overbought area while the candle close below the 10 EMA.
3. When both are strong or week, we do nothing and wait for one side to lose strength.
4. Stop is always above or below the recent high or low. If possible previous high or low will reduce the risk of price fluctuation.
5. Reward is 2- 4 times risk. Depending on market condition.

Well the rules look simple, but how do we know who is strong or week ?
The answer is in the previous highlighted text.
IF buyers are strong they will cause over bought to occur. If this is true then by the time overbought happen buyer must have driven the price higher.
Same if sellers are strong oversold will occur and price will have moved lower.
So if they are moving the price they should take the price to a new area where they have not ventured before. If they are strong thy will and if not they can't.

Let analyse the below chart. I have numbered the swings in the chart from 1- 15.

Starting from 1 in the oscillator we can say indicator made a small dip and moved higher. Analyzing the 1 in candles we see the same thing price moved high. Buyers in control and moved price, thus indicator also went to overbought.
At 2 in oscillator you can see the oscillator fell below overbought slowly and the price too fell saying sellers in control. Till now we cannot take any trade as we have no idea who is strong or week.
At 3 in oscillator the oscillator reached over sold suggesting strong sellers are making their move. Let see the price at 3 it is definitely down but has it exceeded into a new area ? When i say new area i mean has it crossed the last swing low i.e the low of oscillator 1. The answer is no. The price at oscillator 1 is still below the price when reached by oscillator 4. So compared to previous sellers we are still week sellers.
Then the price reached between 3 and 4. Has it crossed high of 2. So buyers are not strong too.
Both are week . We wait.
Then oscillator again bend down and entered oversold and reached 4. Same time price at 4 came down.
Is is below low of 3. The answer is yes but slightly. Of the sellers are slightly strong as they could venture into anew area compared to 3.
Its risky as it is slightly but if we are in a hurry, we can prepare for a sell trade.
But half part of the rule is not yet met. We will wait for week buyers.
We wait as buy happen and oscillator again move high to reach 5 when it cross. By this time how is my buyers. Have the breached the high of recent high between 3 and 4? The answer is no. So buyers are week.
Sellers are strong and then buyers are week. So we enter a sell at 5 as soon as candle close below 10 EMA. Its a risky trade so stop can be placed just at recent high to lose less. Reward your choice. I suggest twice.
Then price reached 6 and oscillator too entered oversold and about to leave oversold. The next question is as sellers are strong according to the definition of oversold then have they made a new low ? The answer is yes. They have blown away the 1, 3 and 4 lows. So my seller is strong definitely.
Next i wait for my buyer to prove that he is week to enter as seller. So i wait. Price move high. Reaching overbought at 7. Have they breached the price of previous high 5 ? The answer is now they are too down. Completely week. Let sell. Stop at recent high. previous high is too far.

Price reach 8. again a new low. Then 8.5 a week high. Again sell.
9 is again a new low So week 10 will be sell.
Price dipped a little but the 11 high killed the trade. Suggesting buyers are trying to get strong.
Then 12 came. Seller could not breach their previous low 9. Sellers are week.
Then 13 came breaching and strongly getting rejected saying buyers are also week.
14 says seller are again week.
15 again conform buyers are week.
Thus no more useless trade.
3 good trade 1 false trade happened which also could have avoided with better practice.

I hope this analysis helped make the same type of analysis in any market you like and practice.

The same can be made into a EA.
I have made it without much coding using EA Builder. You can do it too.

If there is any doubt with this method or you are not able to read price movement in any particular chart, then post the doubt with the snapshot of the chart, i will explain.

it is amazing

Can you show some live trades

What your doing when the indicator goes overbought and the price goes further up and up

Yes i Am thinking of making a youtube video, though i am not good at speaking.. . I understand many of you will not able to understand this concept properly. just use your brain keeping basic definition in mind.
And for the next doubt when the indicator goes into a over region, I might have forgot to mention it, if the indicator has moved deep into the over area you must wait for it to return out of that area. The moment it comes out of the over area you should take the trade. And moreover the trade rule suggest you will only enter when the price break the 10EMA into the direction to which you want to trade and most of the time the price will not break the 10 EMA until a reversal occur.

You will only asses a someone to be stronger or weaker only after the indicator comes out of the over area if it has gone deep into it. As long as the indicator is in the over area it means the buyers or sellers are still making overbought or oversold and price should move in their favor.