Strategy characteristics, trading idea
- work is in progress at H1;
- indicators are not used;
- the basis of the trading system is work from the levels formed in the frame of the cycle trend movement-rollback;
- trading is carried out only with pending orders;
- take profit to stop ratio – 3 to 1;
- working pairs – EURUSD, GBPUSD, GBPJPY.
This is not a copy of standard systems in which the work is carried out according to the trend at the end of the corrective movement. We do not focus on one direction of the chart movement. The cycle of movement-retracement-resumption of movement / its change gives the position of important levels on the chart. Trading is conducted from these levels.
This system differs from classic trend strategies in that we do not look for an entry point at the moment of completion of a rollback or a change in the direction of the market. The goal is to determine the position of the levels, then the work is carried out with pending orders.
Level building rules
As part of the material, I will describe the levels. We will analyze the nuances of entry points, position support in the classroom as part of a special course.
The order of building levels:
- we begin by identifying the clearly expressed movement. In our case, this is a sharp bullish movement, according to its High, we build a resistance zone of a fixed width. We always build support and resistance zones based on the candlestick bodies, focus on the closing price;
- a downward pullback is considered to be completed after the chart breaks one of the boundaries of the basic movement. In our example, the chart has updated the maximum, we build a support zone at the minimum of the downward correction;
- a new maximum is formed, we repeat the procedure for building the level. The market turned around, updated the previous local Low – build a resistance zone at the High of the upward movement;
- by the same logic, we repeat the construction of levels on the following corrective movements.
Let’s extend some of the levels to the right and see how the chart reacts to them. We will talk about filtering entry points on intensive, so far we proceed from the fact that we enter the market on a rebound from the level.
Compared to the standard plotting technique, my approach allows you to take implicit support and resistance levels. And it works!
Trading by levels
The strategy is not break-even, but due to the take-to-stop ratio at the level of 3 to 1, even with a win rate of 35-40%, the deposit will grow steadily. One triggered take profit covers 3 stops. Below are examples of real deals. Classic graphical analysis tools work, but most do not know how to use them correctly. The subjectivity of the use of standard techniques in trading affects. The difference between my strategy is in clearly verified rules – everything is formalized, from the construction of levels to the rules of position tracking. This is a ready-made instruction for making money.