All posts by TradeYodha

Trade: Buy RENEURON GROUP PLC (RENE)

Trade: Buy RENEURON GROUP PLC (RENE)

Snapshot:

Buy RENEURON GROUP PLC (RENE)

Reasons For Trade:

  1. Nearly oversold
  2. Reaching support level

Stop Placement:

1.8p

Targets:

First target: 3.5p where 200sma is

Second Extended Target: 4.0p

Trade Execution:

Wait for the market to get into oversold territory and reach the support level. Watch the price action at support level at 2.435p

Concerns:

None

Planned News/Events Expected:

Unknown

Post Execution Review:

 

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Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
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3 Drives Pattern To Drive Trading Profits

3 Drives Pattern To Drive Trading Profits

3 Drives pattern is a Harmonic Trading Pattern which is highly profitable and predictable. It however requires patience to wait for it complete. It is not a very common pattern as the formation of this pattern requires the price action to go up and down in opposite directions and hence it can be confusing too. Combines with other trading tools it can be very powerful.

A Three Drive Pattern as the name suggests has 3 main legs. The pattern itself is a 5 leg pattern. It can also be thought of combination of two ABCD patterns.

3 Drives Pattern
3 Drives Pattern

It starts at a certain point and an initial AB leg is completed. Then a retracement follows between 61.8 and 78.6 Fibonacci levels to form BC leg. Price action then creates another leg  CD (ideally equal to AB leg or 127.2 Fibonacci extension of AB leg). This complete the first ABCD pattern. Once this ABCD pattern is complete the price action is expected to reverse and go in the direction of point C. If the price action does not close above C and start retracing towards point D again creating another equal or 127.2 Fibonacci Extension, we have a 3 Drive Pattern forming.  Then in order to correctly identify it, we mark new abcd pattern starting with point C of first ABCD pattern and wait for secondary abcd pattern to complete. Between point A and point d we have 5 legs which first condition of a 3 Drives Pattern. Legs BC, CD, cd form 3 impulse legs which makes it a 3 Drives pattern.

At the completion of of point “d”, we expect market to reverse and at least heights of c point. In a string trend, price action can go up to point C and A too.

 3 Drives Pattern Bullish

3 Drives Pattern Bullish
3 Drives Pattern Bearish
3 Drives Pattern Bearish

-Happy Trading

TradeYodha

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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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Use The Magic Of RSI To Beat Market Trends

Use The Magic Of RSI To Beat Market Trends

RSI MagicRSI (Relative Strength Index) is a Momentum Oscillator. It indicates whether a market is losing or gaining its momentum in the current direction. If used correctly in association with other tools, we can use RSI To Beat Market Trends.

Usually RSI is usded in 3 ways. But to produce best results, a trading strategy must make use of other tools and use RSI as one of the additional indicators to give confirmation. This is because of the fact that RSI can stay at a level for a long period of time while price is still moving.

  1. Overbought/Oversold Conditions
    1. RSI crossing over 70 level is considered as Overbought

      RSI Overbought
      RSI Overbought
    2. RSI crossing below 30 level is considered as Oversold

      RSI Oversold
      RSI Oversold
  2. Divergence (Loss/Gain of Momentum)
    RSI Divergences Chart
    RSI Divergences Chart
    Price Action RSI Expected Type
    Making Lower/Equal Lows Making Higher Lows

    (Gaining Upward Momentum)

    Bullish Regular
    Making Higher/Equal Highs Making Lower Highs

    (Losing Upward Momentum)

    Bearish Regular
    Making Higher/Equal Lows Making Lower Lows

    (Losing Downward Momentum)

    Bullish Hidden
    Making Lower/Equal Highs Making Higher Highs

    (Gaining Downward Momentum)

    Bearish Hidden

    RSI Bullish Regular Divergence Example
    RSI Bullish Regular Divergence Example
  3. Center Line Crossover
    1. Bullish above 50:
      1. Not very reliable so other factors/tools need to be added to produce better results.
      2. A cross over 50 level RSI downwards indicates bearish move.

        RSI 50 Crossover
        RSI 50 Crossover
    2. Bearish below 50
      1. Not very reliable so other factors/tools need to be added to produce better results.
      2. A cross over 50 level RSI downwards indicates bearish move.

        RSI 50 Crossover Level
        RSI 50 Crossover Level
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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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Bracketing The Market – Make Profits Either Way

Bracketing The Market – Make Profits Either Way

Bracketing The MarketBracketing is planning technique which plans for both Long and Short string opportunities in a market. There are situations in a market where it is not clear where it is heading to. It is in the middle of nowhere in sort of no man’s land. We do not have a clear indication hence no pre-planned bias on going Long or Short. In such scenarios, we can use Bracketing The Market technique.

We look for both long and short opportunities which are high probability in the market. Once the market gives a signal where it is heading we re-evaluate these planned trades to see if we can benefit from all of them or few need to be cancelled. After we have the clear signal we can also have smaller trading opportunities along the way.

For example: In this EURUSD market, we did not have a clear signal. The price was in the middle of the swing and the RSI was also at 50 level. So we planned for both Long and Short Opportunities.

Bracketing The Market - Make Profits Either Way Long OR Short
Bracketing The Market – Make Profits Either Way Long OR Short

Have a great trading time!

-TradeYodha

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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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Four Stages Of Trade Management For Better Risk/Reward

Four Stages Of Trade Management For Better Risk/Reward

 

Four Stages Of Trade Management In Trading For Batter Risk-Reward Ratio
Four Stages Of Trade Management In Trading For Batter Risk-Reward Ratio

We are in a trade for a purpose and for every purpose there are four stages which realise that purpose. Here are Four Stages Of Trade Management For Better Risk/Reward.

Trade Management is last yet most important stage of a trade. Most traders concentrate on Entry points and others on Stop Loss levels. Picking an entry point and placing stops are far more easier than managing a trade when it is running. They are important in Trade Planning phase but Trade Management stage is the one which fulfils the purpose of trade by realising profits and reducing risks.

Trade Management is all about monitoring and realising profits while reducing risks associated with the trade. There are four stages of Trade Management starting from the point the trade is planned.

  1. Assume Risk (Calculated Risk/Reward)

This stage is the initial stage where we plan the maximum risk that we are planning to take on a particular trade. This come from Trading Plan’s Risk Management and Money Management sections. Usually there are few things that we ask ourselves in this stage:

  1. What is maximum allowed risk per trade in my Trading Plan?
  2. Why my Stop Loss level at this level where it is? Is there any valid rule based reason for that?
  3. What is expected Risk/Reward ratio.

Once decided, we do not change stop loss levels to increase or decrease risk.

2.  Reduce Risk (Moving Stops in our favor)

After a trade is in and started moving in our favor, we must reduce the risk at the first opportunity. But there have to be rules for it. For example: If we are trading a Bat Harmonic Pattern the first target is at 38.2 Retracement and second target is at 61.8 Fibonacci retracement. So as soon as the price exceeds 23.6 Fibonacci level ,we move our stops to in our favor by the same number of pips/points as price action.

3. Eliminate Risk (Break Even)

In this stage we try to break even as soon as the price action has covered half of trading position. We move stops to a half way after taking profits on half of the position. This gives us the liberty to stay in the trade without any risks. If the market reverses and comes back to hit our stops, the worst case scenario will be a Break Even trade.  For example: If we are trading a Bat Harmonic Pattern the first target is at 38.2 Retracement and second target is at 61.8 Fibonacci retracement. So as soon as 38.2 retracement is hit, we close half of the position, move our stop loss level to break even and let half  position run for secondary or extended profits. Here are few Trade Risk Reduction Strategies

4. Closing Trades (Take Profits)

We need to plan this little in advance during trade planning stage. During Trade Planning stage, we decide on Position Size, Risk-Reward and Targets. If there we are planning to have multiple targets in a trade, we must have a position size which is divisible. For example if we want to take two profits targets and trade with 1 contract, we will not be able to close half of that position. So in this case we must trade with two contracts. First 3 stages were more about risk management where as this stage is all about maximising profits without risk. As soon as we break even in a trade, the first priority has to be maximising profits. We can either multiple predefined targets or we can actively manage the trade by tailing stops. For example: in our Bat Pattern Trade example, we can either take profits at 61.8 which was pre-planned or we can continue to tail stops based on a rule based strategy such as formation of structure etc.

Hope this helps. I would love to hear your opinion and suggestions.

Have a great trading time!

-TradeYodha

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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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BAMM The Bat Harmonic Trading Pattern!

BAMM The Bat Harmonic Trading Pattern!

Bat Pattern is one of the most Risk/Reward Ratio favorable harmonic patterns in the directory of harmonic patterns. It completes at 88.6 fibonacci confluence with 161.8 or 261.8.

Bat Harmonic Pattern
Bat Harmonic Pattern

Harmonic Trading
In his book Harmonic Trading Volume 2, Scott Carney described another phenomenon that occurs during the formation of a BAT Pattern. It is called BAMM.

BAMM stands for Bat Action Magnet Move. According to Scott Carney when CD leg of a Bat Pattern forms and it exceeds point B of the potential Bat Pattern, the price action starts to experience a Magnetic Attraction towards 88.6 Fibonacci level where the Bat Pattern is expected to complete. The price action tends to get pulled towards D point.

BAMM The Bat Harmonic Trading Pattern Trigger
BAMM The Bat Harmonic Trading Pattern Trigger

This behaviour is not 100% consistent but is very common and can be used to make more profits.

Usually once the CD leg exceeds point B, the price action comes back to retest the zone between point B and point C before resuming direction towards point D at 88.6. Similar to 2618 Trade Entry Technique we can follow 2618 Trade Entry Technique rules to enter the market in this zone with a target completion at 88.6 i.e. point D. Stops will have to be either beyond point C or based on Supply/Demand zones in CD leg.

BAMM The Bat Harmonic Trading Pattern
BAMM The Bat Harmonic Trading Pattern

At point D we can take profits on this trade and enter a new trade at the completion of the Bat Pattern.

Leave me a comment. I would like to hear your opinions and suggestions.

Have a great trading time!

-TradeYodha

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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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What Is 2618 Trade Entry Technique?

What Is 2618 Trade Entry Technique?

2618 Trade Entry Technique is probably the safest way to trade a double top or double bottom and although the Risk/Reward ratio is a little less favorable.

The basic concept behind this technique is that after a double top or double bottom formation, the market usually comes back to retest the structure before it finally resumes the originally diverted trend.

In double top formation the trend is downwards and in double bottom formation the trend is upwards. After the retest the market starts following these trends again.

2618 Trade Entry Technique
2618 Trade Entry Technique

This retest gives us a very good opportunity to get involved in the market. 2618 Trade Entry Technique is the best confirmation you can get in double tops and double bottoms.

The PRZ runs from 61.8 fibonacci retracement to highest high of the recent double top formation. In case of double bottom it is between 61.8 retracement and lowest low of double bottom formation. Hence the stops must be above double top highest high and below double bottom formation.

Few points to remember:

  1. This method has few disadvantages:
    1. The price may never come back to retest the PRZ
    2. Reward may be lower and risk higher because of confirmation in wide PRZ. So if possible we should wait for candle stick formations inside the zone to take a late entry.
  2. V formation and break:
    1. Double top and double bottom formation is only valid if a V (double top) or inverted V (double bottom) formation has been formed.
    2. We must use 2618 Trade Entry Technique only when the market has broken this V formation and has come back to retest the PRZ.

Have a great trading time

-TradeYodha

 

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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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How To Score A Trading Opportunity With Your Tools

How To Score A Trading Opportunity With Your Tools

Tools for Scoring Trading Opportunity
Tools for Scoring Trading Opportunity

Not every trading opportunity that we see on charts is same. Trading opportunities must be filtered and we must pick only the best ones. To cherry pick trading opportunities which have best expectancy and best profit margins, we must have a Scoring Card in our trading plan. This helps us filter out a lot of risk even before trades have been booked.

I use below tools for scoring a trade. Each trade can have a score between 1-5 depending on their quality but each trade must have at least score of 20. That means at least 3 factors with best quality must be a present in a trade. More the better score.

Depending on score I can change my position sizing too to minimize risk.

Tool
Fibonacci Confluence
Advanced Harmonic Patterns
ABCD Pattern
50 SMA
200 SMA
SMA Crossover
Double Top/Bottom With RSI Divergence
Bollinger Bands Extreme Deviation
RSI Oversold/Overbought
How Far The Price Has Moved From The Zone In Past
How Much Time It Has Spent In The Zone In Past
Is Zone Fresh

 

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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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Head and Shoulders Pattern With Fibonacci

Head and Shoulders Pattern With Fibonacci

I recently found this great post by morshedul.sazid on Trading View. I wanted to capture this here too for benefits of me and others. This simplifies and quantifies Head and Shoulders Pattern with Fibonacci ratios.

Head and Shoulders Pattern With Fibonacci
Head and Shoulders Pattern With Fibonacci
  1. First thing is to identify the Butterfly pattern: The first profit objective will be at 78.6 retracement of AD of the sell from butterfly
    B. 2nd sell will trigger at 50% retracement and the profit taking objective will be the touch of the neckline or break of it.
    C. 3rd sell can be triggered from the break of the neckline and the profit objective will be 1.272 of AD.
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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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EURAUD Gartley Pattern Butterfly Pattern ABCD Pattern 200SMA Short Forex Trading Idea

EURAUD Gartley Pattern Butterfly Pattern ABCD Pattern 200SMA Short Forex Trading Idea

Snapshot:

EURAUD Gartley Pattern Butterfly Pattern ABCD Pattern 200SMA Short Forex Trading Idea
EURAUD Gartley Pattern Butterfly Pattern ABCD Pattern 200SMA Short Forex Trading Idea

View it on TradingView

Reasons For Trade:

  1. Gartley Pattern completion in PRZ zone
  2. Butterfly Pattern Completion in zone
  3. ABCD Pattern completion
  4. Fibonacci confluence of 78.6 retracement and 127.2 extension of last retaracement
  5. 200sma in the zone
  6. Strong supply Area

Stop Placement:

Above supply zone

Targets:

as shown, there are 3 targets

  1. Structure based
  2. 38.2 Fib retracement from advanced pattern
  3. 61.8 FIB retracement from advanced pattern.

Trade Execution:

Wait for confirmation

  1. Take targets as you go along
  2. Tail stops on 3rd target as EUR can take a bearish rotation again to give large profits.

Concerns:

None

Planned News/Events Expected:

Week is packed with news

MonOct 26 5:00am EUR German Ifo Business Climate
TueOct 27 5:00am EUR M3 Money Supply y/y
8:30pm AUD CPI q/q
AUD Trimmed Mean CPI q/q
WedOct 28 8:30pm AUD Import Prices q/q
ThuOct 29 All Day EUR German Prelim CPI m/m
4:00am EUR Spanish Flash CPI y/y
4:55am EUR German Unemployment Change
8:30pm AUD PPI q/q
FriOct 30 3:00am EUR German Retail Sales m/m
4:00am EUR Spanish Flash GDP q/q
6:00am EUR CPI Flash Estimate y/y
EUR Core CPI Flash Estimate y/y
EUR Unemployment Rate

 

Post Execution Review:

Pending

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Leave a comment: I would love to hear your thoughts, suggestions on this topic. Please leave a comment.
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Disclaimer: This web site is just my financial trading log and is for educational purposes.
Please do your research, analysis and take your decisions. You must not rely on my actions or analysis.
Please see the Disclaimer page.
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