Comprehensive Trading System/Methodology

[bbmac]

A strong set-up combination

As you will know the Reversal Extreme set-up indicates potentially overbought or oversold conditions oin the time frame it develops on. When this develops at the same time as a clear regular or hidden divergence based reversal/re-entry set-up on the next higher t/f, this is a potentially strong combination at pot supp/res/sbr/rbs.

For eg, the following 1min Rev extr with 5min Rev C set-up y/day;

The supporting 5min regular divergence based reversal set-up was here;

 

[bbmac]

Potential sbr factors confluence

The 4hr chart showed the confluence of the previous swing lo with the decsending res T/line at Y/day's Gbpusd hi best;

It was the 2nd test of the desc res t/line.

 

[bbmac]

Confluence of optional 'small chart' technical factors

Gbpusd current intraday low,-this was the optional small chart, note the confluence of supporting conditions for a reversal there....breech of donchian channel (pink) and the first 2of 3 extreme fib tunnels (red dotted,) and most significant, price breeched the first ascending fib channel.

When the fib channels ascend into price @ potential support/descend into price @ pot res, it can be a good supporting technical indication of a reversal/pullback.

 

[bbmac]

Re-entry to downtrend??

It was messy and no 'with trend' follow thru to new lows yet but the 1min Rev Aii seq with supporting 15min Re-ent 4 set-up (no clear 5min set-up) @ the prev 1hr sw lo zone, is shown below; The set-up has seen +30+pips available at time of writing.

The supporting 15min Re-entry 4 set-up is below:

Re that 15min supporting Re-entry (to next t/f trend after a pullback) set-up, no real downtrend on 1hr but macd hist below axis and 4hr pointing down although still above axis at time of entry.

 

[bbmac]

2nd test of pot supp = prev 5min sw lo zone

You can see the 1min Reversal C seq that delivered a very easy and quick +90+ pips available at time of writing, it was the 2nd test of a prev 5min sw lo zone...and you will see too the 1min Rev extr set-up on this screenshot that created the 5min swing lo zone.

If only all trades were as as quick and easy as that, lol.

EDIT: 1120am gmt...over 200pips from entry now...see posts below

 

[bbmac]

MNI stating that:

You can see the 1min Reversal C seq that delivered a very easy and quick +90+ pips available at time of writing, it was the 2nd test of a prev 5min sw lo zone...and you will see too the 1min Rev extr set-up on this screenshot that created the 5min swing lo zone.



If only all trades were as as quick and easy as that, lol.

 

[bbmac]

re 2 posts above

 

[bbmac]

30min HL

Perhaps the HL (circled) visible 5min -30min prompted participants to join the buying,? ...certainly thrust (implying momentum) candles emerged off the HL 5min thru to 30min, closing higher than the last LH of the then downtrend on those t/f's.

30min shown below

 

[bbmac]

4hr descending resistance T/Line- 3rd touch

4hr descending resistance T/Line- 3rd touch, along with the minor potential supp/res factor of the Dly H3 cam pivot provided were present as the 1min rev C supported by the 5min Rev Extr set-ups developed,...see-ing +30pips gain available before another spout of buying to new highs.

The 1min and 5min reversal set-ups are replicated below )They were further supported by the conditions on the 1 and 5min small charts.

1min Rev C

...supporting 5min Rev Extr ii

Goes to show that even reversal set-ups on 2 t/f's can indicate only a trade-able pullback, albeit 30pips, against a strong move up or down/trend.

 

[bbmac]

An introduction for new observers/thread visitors of this system/methodology

This Trading System/Methodology revolves around the confluence of technical phenomena that is critical to and forms the essential basis of the System/Methodology, described as A-D below;

It is the confluence of these technical phenomenons that give rise to the trading edge provided by this trading system/methodology.

Completing Tasks 1-3 below, in the way described in this document will enable a user of the Trading System/Methodology to trade with high probability and low risk.

A. Price Action:
i. Overall price action-Identifying what the prevailing market conditions are (trend or range) by means of Overall Price Action – Classic Previous Price Swings Peak/Valley Analysis. (Task 1)
ii. Individual Price Action -as the trigger to entering the market at one of the indicator based set-ups/patterns provided by C and D, described below.

B. Support & Resistance: Identifying what areas in the market may provide Support or Resistance, and where Support may become Resistance if breeched to the downside and tested from the other side (SBR,) and conversely where Resistance may become Support if breeched to the upside and tested from the other side, (RBS.) (Task 2)

Once this analysis is complete (Tasks 1 and 2), the aim is to identify Individual Price Action as the trigger at one of the technical indicator based set-ups/patterns that indicate a high probability trading opportunity, either with or against trend….this is the Trading Edge.

These technical indicator based set-ups/patterns are based upon;

C. Oscillator Divergence from Price/Extreme Oscillator Readings
D. Price Band/Channel Deviation/Extreme Deviation from it’s mean.


Memorising these set-ups/patterns comprised of C and D above, then recognising them in realtime @ potential supp/res/sbr/rbs, with an individual price action trigger, is Task 3.

Consistency is the key to longevity in any market. Professional traders wait for the probability of a successful outcome to be substantially weighted in their favour indicated by the confluence of technical conditions that suggest a high probability trading opportunity. The confluence of the 4 technical factors Aii -D, within the context of Ai, give rise to high probability trading opportunities.

The Trading System/Methodology analyses price across 3 time frames. The immediate / trigger, (hereinafter called the trigger time frame) the intermediate, and the higher/trend (hereinafter called the trend time frame.)

My own preference is to use the 1min, 5min and 30min as the trigger, intermediate and trend time frames respectively. The Trading System/Methodology can be used on longer time frames such as 1hr/4hr/Daily, or indeed 4hr/Daily/Weekly etc..

This underpinning 3 time frame approach is based upon, and is an obvious evolutionary development of Dr. Alex Elder’s methodology (Come into my Trading Room etc...) who looks for set-ups on the intermediate in the direction of the trend time frame, with entry fine tuned/timed on the trigger time frame chart.

The Trading System/Methodology can deliver attractive gains in any liquid market but demands of the user his active attention to and engagement with the market not least in the identification of the prevailing trend, potential Support/Resistance in the market, and the memorising of the Indicator based set-ups/patterns that enable high probability trading opportunities at such potential Support/Resistance/SBR/RBS.

 

[bbmac]

2 great supporting set-ups @ current i/day highs in gbpusd

The 61.8% fib of the 4978-3501 swing provided the resistance in gbpusd with the following 5 and 15min supporting reversal set-ups @ that level. (This occurred after my own trading session had ended but good example of hi-probability trading, even aginst the prevailing trend.) Price at entry had moved around 330pips lo-hi, which was around the 100day ATR.

The fib is here:

The 5min supporting reversal set-up was a great Rev A ii;

The 15min further supporting Rev B is shown below;

The set-up saw +180+ pips available from the trigger entry.

 

[bbmac]

Thrust candles

Worthy of re-posting (and whilst my preferred instrument gbpusd is doing nothing) following a question via email about Thrust candles...the screenshot shows one in a high probability circumstance.

Remember a thrust candle is one where the body of the candle is at least 75% of the whole candle including the spikes, (body bigger the better as a % of whole) and it implies buying or selling momentum.

They are potentially useful as a high probability individual price action trigger on breakouts of ranges/channels (as below) or supp/res or 'with trend' direction. The way to trade them is to buy or sell the close of a bullish/bearish thrust with stop at other extreme of candle.

Like all price action, it can be more reliable on the longer t/f's.

G/L

 

[bbmac]

resistance confluence eg

First test of the descending res t/line - 1hr with the minor 1hr swing lo..

A 1min Rev Extr ii set-up made for a hi-probability trading opportunity;

The set-up was supported by conditions on the 1 and 5min small charts and although an apparent Rev C seq set-up on 5min,...look more closely ...the set-up came at a slightly LH (@ the H circled) not an equal H or HH to the highest swing H (the HH) needed to validate the bearish sequential divergence...Nonetheless the set-up has seen +20+ pips gain available at time of writing.

the 5min situation is below

 

[bbmac]

The more you put in...The more you get out.

It's an old maxim, but generally holds true.

Ahead of the new trading week, I do the following;

a. Review my trading log/journal for last week,...see-ing if I can spot patterns of behaviour that may impact on my trading results positively or negatively and taking appropriate action.

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b. Updaing the Fibs of the major market swings and the obvious Previous Swing Hi/Lo's on the trend t/f (using 1hr as the proxy for the 30min trend t/f in respect of potential supp/res/sbr/rbs zones, in my case) that may impact as potential Supp/Res/Rbs/Sbr zones into the new trading week.

c. Reviewing the longer t/f charts above my own trend t/f...On my preferred instrument of spot Gbpusd for example a solid Bullish dqaily candle close on Friday, a Weekly Bullish (inside bar) thrust candle close, and a Monthly Doji close. Looking too at the potential set-ups on those t/f's for indications of likely price action biais in the forthcoming trading session.
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d. Noting the important fundamental data/speeches/other events that may impact the market in the forthcoming week.

e. Assessing whether any events over the w/e may affect the market. (Davos world economic forum for eg...)

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f. Looking at Xe.com for their latest quotes, top see whether a gap up or down on open is likely.

At the start of my own trading session on Monday (London/European morning session) I will update again where appropriate/necessary, and will then have as much information as I need to make the most informed trading decsions using this system/methodology as my tactical technical approach to the market I trade.

 

[bbmac]

1min Re-entry (after pullback) into 5min downtrend

Re-entry set-up came @ the previous swin g lo=previous support = potential sbr zone on the next t/f up from the re-entry set-up, ie the 5min set-up into whose trend the re-entry [after the pullback] was sought.

The screenshots tell the story;

The set-up has seen over 100+ pip gain available from entry.

Another example of seeking one of the repeating re-entry set-ups @ a potential sbr/rbs zone on the next t/f into whose trend (+) a re-entry after a pullback is sought. NB: the macd histograms were crossed down and pointing down on next 2 higher t/f's from the re-entry set-up, ie the 5 and 30min.

 

[bbmac]

Useful/interesting article

Band/Channel deviation and Support/Resistance and price action trigger are some of the main cornertstones of this system/methodology and are used in the simple trading approach outlined by the author in his article ' The Rubber Band Effect ' posted to this site, link below:

T2W Day Trading & Forex Community

 

[bbmac]

Another Hi-probability trading opportunity

An early Reversal set-up in this London/European morning session re Gbpusd...screenshot below shows the 1min trigger Reversal C @ potential resistance = minor 1hr swing hi (asian hi,) offers touted by mni 4270/80, and the minor factor of the Daily pivot...a q1uick +20+ pips available.

Although the set-up had no clear next t/f (5min) [+] supporting set-up there were supporting conditions on the small charts to 5min and a confluence of potential resistance factors, making it a hi-probability trading opportunity.

The previous 1hr minor swing hi (asian hi) zone is shown below;

 

[bbmac]

Interesting podcast...a lot of similarities

Tradinginterviews.com ....listen to this podcast, interesting points.

http://www.trade2win.com/boards/pod...2-03-trader-profile-mike-toma.html#post645946

 

[bbmac]

Highest probability Re-entries to next t/f trend (+) after a pullback..Eg & Reminder

Just killing time whilst I let a trade play out....

You will see from the screenshot below how the 5min downtrend developed in Gbpusd off 4270/75 Gbpusd area current intraday highs today...ie LH/LL's.

At the LH circled in blue although there was a 1min Re-entry type 4 set-up and the set-up came at a potential sbr zone being the prev sw lo zone on this next t/f up, the 5min, the 30min macd hist was not crossed below the axis, and nor was it pointing down (v. min requirement.) Whereas @ the LH circled in white again at a potential sbr zone on this 5min t/f, ...the 1min Re-entry set-up saw both 5min macd hist crossed down and the 30min about to cross down and definately pointing down (as incidently was 1hr.)...so a higher probability set-up...which has just seen a with 5min down trend follow thru of +60+ pips gain available as I write this.

Remember for the highest probability Re-entry to trend trading opportunities....the min requirement in re-entering a trend (after a pullback ) is to do so @ one of the Re-entry set-ups on the t/f below that the trend exists on @ pre-identified potential sbr/rbs on that t/f, so long as a trend per overall price action-classic peak/valley analysis) exists on that t/f and the macd hists are (in case of downtrend) crossed/pointing down on next t/f up and at least pointing down (better crossed down also) on next t/f up from that.

Eg if a 1min Re-entry set-up develops @ 5min potential sbr/rbs - a trend must exist on at least that 5min t/f, (better if extends beyond that) and 5/30min macd hists must be as described.

Eg if a 5min Re-entry set-up develops (co-existing as a 1min Reversal set-up) @ a 30min potential sbr/rbs - a trend must exist on at least that 30min t/f (better if extends beyond that) and 30min/1hr macd hists must be as decsribed.

 

[bbmac]

It's a set-up...be excited!!

Ari Kiev writes that when you see one of your trading set-ups that make up your trading edge, you should be excited, the higher probability is that you are going to make money!!

Dr. Alex Elder decsribes a trading edge as '....an island of order in an otherwise sea of chaos'

Both these statementsts are sound observations, particularly if you ahe v a trading edge that you know has performed well historically and you apply those rules again to future situations.

Remember that trading and indeed life itself is just a series of reperating patterns and so long as your trading edge is based on sound principles and you learn about it, it's idiosyncracies and it's behaviour under all market conditions it should serve you well.