One thing which i found common in all of them is "Enter where others will be exiting".
Ok, let's continue.
Every trade has two components: entry and exit. Entry is usually more difficult because you need to get a good price and limit order does not always help you. So we will postpone "entry" to later and now speak about Exit.
Exit - means placing Stop Loss and Take Profit. In my opinion, every trade should have this orders, otherwise it's more like gambling, not trading.
According to "Against The Crowd", where should we place SL and TP?
The main idea is to place Take Profit at the level where the crowd usually place their stop loss. How do you think where it is?
Of course it's a previous high or low point. Everybody know that "if the price reach the local high or low it will more likely go further, so place your stop loss exactly at the top/low".
In practice, the price usually trigger a large stop loss cluster and goes back:
Our goal is to place our take profit exactly at the level of this stop loss cluster. So the price will often "accidentally" trigger our TP, while the crowd "runs their stops".
Oh, my poor english... I'll show the picture:
The order book will help us to determine if the cluster really exist.
Stop Loss. You should place your Stop loss at the point, where nobody usually place their stops:
You can chose between short stop loss (point 1) or long stop loss (point 2). I use them both, depends on current market situation.
To end this post, some examples from practice:
Time will tell.
