T2W Trading Community

The Basics

Enter a trade on a confirmation of a break of the 100 EMA – a confirmation is when the price pulls back towards the 100 EMA, and then continues in the direction of the breakout.

Stay in the trade all the time that the price remains through the 100 EMA.

Exit the trade on confirmation of a top or a bottom of a short term trend, or exit the trade when the price has broken the 100 EMA in the opposite direction to your entry plus 20 points.

If you are in a trade, and the price is within + or - 20 points of the 100 MA, DO NOT EXIT a trade. Remember, all the time the price is outside the 100 MA (+/- 20) we DO NOT panic an exit.

DO NOT ENTER a trade if CCI is less than -200, greater than 200, or RSI is less than 20 or greater than 80 – the reason being is that at these points we can experience major volatility.

For example, look at Figure 1, when the price pulled back at 8,220 and CCI was near –200; you may be tempted to go long here and get into position early. Bad move! There is a clear bounce off RSI 22 as well…. yet the open on this day saw RSI drop to 18 or so: that fixes the low of the day, so you have to be prepared for a drop back to that level.

At these extremes, you need to wait for price confirmation - i.e. a higher high and a higher low, before going long at extremes of RSI and CCI. Remember this strategy is about safe trading, not suicidal gambles.  Consistent small wins are the road to riches.

The name of the game is to MINIMISE losses and let WINNERS run. Secondary to this is trying to get the odds in your favour of making a successful trade, as opposed to a gamble.

We'll find out what tops and bottoms we can expect to see, how we can calculate each mini move with expected targets, and how we can analyse the risk we are taking by staying in a trade, as opposed to exiting early.

You should not look at the spread bet price until you are ready to close your trade. Basing your decisions on the SB price will just freak you out of a trade. Now and again, it will undoubtedly cost you a bit more as we enter a "bad" trade. Hopefully, on balance, the number of good trades will more than cover you!

Our typical targets will be between 50 and 150 points. Those of you wanting to take a longer term view (and if you’re not averse to holding positions overnight) you can apply exactly the same rules to the 10 minute chart with the same results.

One final rule: as one door closes, another one opens - NOT!!!! Just because we exit at a top, or a bottom, this is NOT a signal to reverse the trade. We are not scalping here!

When you close a winning trade, sit back and congratulate yourself. Take time to see if the action continues in your favour. Did you get out early? Where will we find our next entry?
One of the keys to trading is to be constantly assessing your opinion and the situation. W.D. Gann once said “Always be prepared to have a change of mind”.