Hello. I'd like to share a strategy that adheres to the principles of being simple, non-subjective, consistent, and most importantly effective. If a trading strategy is not based on sound ideals it is doomed from the start, no matter how many indicators or filters you throw at it. Beginners please understand this.
This thread is open to all. One of the benefits of the above four principles is that anyone can learn the mechanics of the system quickly, because it is not complicated. This does not mean you will be successful quickly. The real work lies in the application of the strategy day in and day out, and trusting in the process of your edge proving itself over time. But basically this is a freestyle thread. Feel free to post comments, ideas, trades, whatever you want. As long as it's positive, productive, and in-line with the topic.
I will post the rules up front, and then if there is any interest we might discuss how the four principles relate to the strategy.
The goal is to stack H1 and H4 positions in the direction of the daily and weekly trend. How is this accomplished?
1. Buy only if price is up on the day
2. Sell only if price is down on the day
3. All H4 engulfing bars may be taken
4. H1 engulfing bars are ideal after a pullback, but not required
5. Trigger is a spread +1 break of the engulfing bar
6. Stop is 10 pips below previous swing low or engulfing bar
7. Move stop to break-even at 1:1RR, and hold for minimum 2:1RR. Once a comfortable 2:1 has been achieved, meaning 3:1 or 4:1, move stop to 2:1. Then either hold on for the ride or trail behind previous closed daily or H4 candle.
8. Previous monthly, weekly, and daily high/lows will be the only lines used for support/resistance. These lines can also be used for profit targets and directional bias. For example, it would be prudent not to sell into a market that has just broken its previous weekly or monthly high.
9. Each trade in a stack is treated as a separate position unto itself
From this chart example, you can see there were potentially 5 stacking signals in the last 2-3 days. All signals triggered above their respective daily opens, and all triggered on the next candle. The only exception is signal #3, which I would consider more of a 2-bar engulf pattern (the yellow arrow being on bar 2). Price has also recently broken its previous weekly high, while also breaking previous daily high at least the last three days in a row. Both are excellent indications of further upward bias.
Take note of the Multi-meter in the top right corner. H1 through MN1 are all up relative to their current opens. If you had taken any or all of these signals, there would be absolutely no reason to exit any of them at this point. Quite the opposite. You'd be looking to stack as many valid positions in this direction as you can, until the market proves your positions wrong.
Here is a more detailed look at stacking on the H4 chart, same pair. Entries and exits were rounded to the nearest 5 pips for ease of example's sake. All signals closed up on their respective opens, and all triggered on the next bar. There would be no reason to exit any of these positions yet.
Not every engulfing bar in line with daily trend will provide stacking opportunities like this. Some will be stopped out. Some will be flatted. This is what it's supposed to look like when you're doing it right. Ultimately the market will dictate the frequency and length of the signals. The best we can do is consistently put ourselves on the right side of the probabilities.
One very important thing to note in the second screenshot example. Take into context the 'playing field' in which the signals came into being. Price had recently broken previous monthly high, and then consecutively broke previous weekly high two times in a row. Look at the candle that broke monthly high: solid. The candle that broke weekly high the first time: dominant. The candle that broke weekly high the second time: dominant. This market is screaming long at the moment. Context has a huge impact on how a single engulfing bar can be interpreted.
Stack H4 and H1 together at the same time, in the same direction. Be more selective with the H1 signals.
Lastly, just a few short lines to think about from a book called 'Trading in the Zone.'
1. Anything can happen in the market
2. You don't need to know what will happen next to be successful
3. There is a random distribution between wins and losses for a given edge
4. An edge is defined as an indication of a higher probability of one thing happening over another
5. Every moment in the market is unique
Thank you.
This thread is open to all. One of the benefits of the above four principles is that anyone can learn the mechanics of the system quickly, because it is not complicated. This does not mean you will be successful quickly. The real work lies in the application of the strategy day in and day out, and trusting in the process of your edge proving itself over time. But basically this is a freestyle thread. Feel free to post comments, ideas, trades, whatever you want. As long as it's positive, productive, and in-line with the topic.
I will post the rules up front, and then if there is any interest we might discuss how the four principles relate to the strategy.
The goal is to stack H1 and H4 positions in the direction of the daily and weekly trend. How is this accomplished?
1. Buy only if price is up on the day
2. Sell only if price is down on the day
3. All H4 engulfing bars may be taken
4. H1 engulfing bars are ideal after a pullback, but not required
5. Trigger is a spread +1 break of the engulfing bar
6. Stop is 10 pips below previous swing low or engulfing bar
7. Move stop to break-even at 1:1RR, and hold for minimum 2:1RR. Once a comfortable 2:1 has been achieved, meaning 3:1 or 4:1, move stop to 2:1. Then either hold on for the ride or trail behind previous closed daily or H4 candle.
8. Previous monthly, weekly, and daily high/lows will be the only lines used for support/resistance. These lines can also be used for profit targets and directional bias. For example, it would be prudent not to sell into a market that has just broken its previous weekly or monthly high.
9. Each trade in a stack is treated as a separate position unto itself
From this chart example, you can see there were potentially 5 stacking signals in the last 2-3 days. All signals triggered above their respective daily opens, and all triggered on the next candle. The only exception is signal #3, which I would consider more of a 2-bar engulf pattern (the yellow arrow being on bar 2). Price has also recently broken its previous weekly high, while also breaking previous daily high at least the last three days in a row. Both are excellent indications of further upward bias.
Take note of the Multi-meter in the top right corner. H1 through MN1 are all up relative to their current opens. If you had taken any or all of these signals, there would be absolutely no reason to exit any of them at this point. Quite the opposite. You'd be looking to stack as many valid positions in this direction as you can, until the market proves your positions wrong.
Here is a more detailed look at stacking on the H4 chart, same pair. Entries and exits were rounded to the nearest 5 pips for ease of example's sake. All signals closed up on their respective opens, and all triggered on the next bar. There would be no reason to exit any of these positions yet.
Not every engulfing bar in line with daily trend will provide stacking opportunities like this. Some will be stopped out. Some will be flatted. This is what it's supposed to look like when you're doing it right. Ultimately the market will dictate the frequency and length of the signals. The best we can do is consistently put ourselves on the right side of the probabilities.
One very important thing to note in the second screenshot example. Take into context the 'playing field' in which the signals came into being. Price had recently broken previous monthly high, and then consecutively broke previous weekly high two times in a row. Look at the candle that broke monthly high: solid. The candle that broke weekly high the first time: dominant. The candle that broke weekly high the second time: dominant. This market is screaming long at the moment. Context has a huge impact on how a single engulfing bar can be interpreted.
Stack H4 and H1 together at the same time, in the same direction. Be more selective with the H1 signals.
Lastly, just a few short lines to think about from a book called 'Trading in the Zone.'
1. Anything can happen in the market
2. You don't need to know what will happen next to be successful
3. There is a random distribution between wins and losses for a given edge
4. An edge is defined as an indication of a higher probability of one thing happening over another
5. Every moment in the market is unique
Thank you.
