My Entry vs My Stop vs My Exit

[walterw 10]

I want to start this thread in order to bring some light on the RRR issue I did start on some other thread.... I hope we can all interact and help in this true enigmatic topic...

 

Where is my Entry in relationship with my stop... and where is my entry in relationship with my exit...

 

 

Obviously that relationships should give me my RRR.... BUT its not just a RRR math... its a STRATEGY....

 

Let me start with the "type" of entry a succesfull trader should use : confirmed entry vs anticipatory entry... if you "wait" for confirmation on your entry... (lets say crosovers, etc...) most probably you are going to be to far from your stop... so you got a bad RRR from your stop... if you "anticipate" in a key area that happens to be very near (tight) to your stop... then your entry its getting more Happy... on the other side... is there any technical room for my target ? can I expect a good move on this trade ? or is it to near to a S&R level that will stall my trade ?

 

Anticipatory action on key areas with very small stops vs large potencial moves makes trading a very diferent experience... Waiting for confirmations.... by by by by your oportunity just took the train... thats why some traders got divorced from indicators... because they thought that indicators where to be used as "confirmation tools" to take a trade... well WRONG. Indicators are VERY USEFULL to give you a road map for you to "anticipate" whats gona happen... and trading should not take place on the "confirmation" arena but radder on the "anticipation" one... so areas make a great job on the anticipation job... and they can be clearly derived from technical indicators or x levels like mp levels, pivots etc...

 

Do you want to have a good RRR ? well dont be a "confirmed trader"... be an "anticipated trader".... Later I will share some charts, before I would like to hear some feedback... cheers, Walter.

[ant 10]

... and trading should not take place on the "confirmation" arena but radder on the "anticipation" one...

 

Walter, I totally agree with this. Although confirmation reduces risk, it also usually results in much of the opportunity passing the trader by. It always comes down to a trade-off between risk and reward. But in trading, I think it would be tough to be profitable in the long run if one requires too much confirmation before entering a trade. As you pointed out, key areas are excellent for anticipating trades. Assuming the risk/reward (i.e., entry and stop loss placement) is good, a trader should just enter the trade near a key area and then monitor the trade. A trader can then look for confirmation while they are in a trade, otherwise they can simply exit the trade for a small loss. One can always re-enter if the opportunity still exists. Sometimes too much emphasis is placed on the entry and not on the trading itself when one is actually in a trade. This is the way I trade too, so I'm looking forward to this thread.

[Soultrader 12]

Nice one Walter. I use two approaches in trading. I am mainly a anticipated trader because I rely heavily on key price levels that I identify. So my order goes in as soon as tape tells me to. To me I consider this an aggressive approach.

 

On the other hand, I am a confirmation trader when I use a countertrend trading strategy. I like to play safe instead of trying to catch a falling knife. Thus, I wait for additional confirmation like higher lows or new TICK high's. This is a more conservative approach.

 

In my trading, entry is everything to me. I scale out on all my positions: half positions at either +10 or +20 (depending on tape). Exiting is the easier part of my trading because I usually exit at pivots or known S&R levels. The only drawback behind my style is... I'm a Ichiro. I can hit singles and doubles across the board, but its rare when Im in a homerun trade.

[torero 10]

Prices either confirm one direction or another or neither. I trade on confirmation to reduce risk unless the S/R is a major one like on monthly or weekly charts. I let prices tell me when I should get in and get out, not S/R as my primary signal. Many times, I've left money on the table anticipating an S/R would stop prices, but end up breaking through and stay broken. Price first, S/R second is my rule of thumb. S/R are there but it's just another line unless prices react to it. But I do anticipate the targets by looking for S/R as possible exit points. This anticipatory guess is to calculate my RRR only.

 

For entries, I need confirmation to get in, like higher high/low or lower high/low. Without this, market may continue and my entry will be way off and no nearest support in sight to set my stop. If I don't have a stop, I don't take a trade. I need to let the market find me a support first before I can use it as a stop (talking about long entries here). True the entry and stop distance is far but the risk of anticipate is what many players do like "catch the falling knife" in smaller scales. I stopped doing that after finding out the bleeding from the cuts were too excessive.

 

One last thing, anticipating is also going against the momentum, this is something I cannot allow myself to get into. I can never anticipate where the downmove will stop. Even at S/R there is a tendency for prices to overshoot it then reverse so the stop is useless because it may get hit. Best thing is to wait for it to form and go with the momentum. Momentum is what get you into profit quickly and many times stay in profit.

[ant 10]

This is an interesting thread indeed. I think Soultrader, Torero, and I may be saying the same thing, just differently, especially about how we use S/R. Let me quote a couple of paragraphs from Mind over Markets, page 37, which summarizes my belief about confirmation and how I strive to trade, but I'm not quite there yet.

 

Confidence Level Trading based on structure provides the greatest level of comfort and confidence, for there is obvious proof on which to base a decision. The more information we have in our favor, the more comfortable we are with a trade. Unfortunately, visible information and opportunity are inversely related. The more structural information present, the less an opportunity still exists. Thus, if a trader waits for too much information, chances are good that the real opportunity has been missed. If all the evidence is present and visible, then you are far from the first to have acted on it and probably have poort trade location.... Seasoned traders with a whole-market understanding, on the other hand, trade using logic and time and then monitor for additional information (structure) necessary to increase confidence in the trade.

 

Trade Location Later recognition leads to later entry and exit, which in turn leads to less desirable trade location. For example, range extension (structure) confirms that other timeframe buyers have entered the market. But when did they enter the market? If we rely solely on structure, we do not realize the other timeframe buyer's point of entry until the point of range extension, that is, when price is on the day's high. In many cases, it is possible to know that buyers are assuming control before the actual structural confirmation (range extension)...

 

Walter, sorry for hijacking your thread. I hope my comments are relevant to the type of feedback you were asking for. I'm looking forward to seeing your charts and learning more about how you enter (anticipate) a trade.

[walterw 10]

Great feedback Guys ¡¡¡ thanks ant for those quotes, very good stuff on confirmation vs anticipation... for torero : it is obvious that you need some basic level of confirmation... when I say confirmation, I mean a great level of facts on the table that made us loose the best spot to get in the market... now I would refer to PRE-CONFIRMATION , it is a hint that this or that will happen... and I will react previously (anticipation) on this premise so I can have a competitive entry... we dont want to get stabbed with a knife or hitted by a train... we are talking of being "wise" in anticipating our technical argument... if our argument WILL work then where is the best spot to get in ... any way if my argument was going to FAIL... then I prefer to loose less... many times we get confirmed just to find out our trade (technical argument) was going to fail... it would be better to fail (anyway) in the smallest risk... thats what this "anticipation" can do for us..

[walterw 10]

I will present one of my basic aproaches to trading... non different to the ones presented here on this site... I call it: Happy M Trade just about any tradeable instrument is plagued all over with M`s , this formation responds to a major concept related to the psicology of the masses, but we dont need to get in to deep on does details, just open any chart, start spotting M`s and you will find hundreds of them... now M`s by them selfs dont mean nothing... but M`s at key levels they do mean a lot... I became obsesive with RRR some time ago and started to find the best way to really have a ultra competitive RRR on my trades.... I thought this : I am not a good analyst, I dont have good setups :o well lets try being a good RRR `ist and find a simple or maybe stupid setup that will at least have an extraordinary RRR... so M`s came on the way ... and they DO THE JOB ... this M`s formations have the virtude of giving a terrific RRR on trades... even if you get cooked 50 % of the times still you can survive thanks to the RRR in this pattern. I attach a theoretical explanation, I do trade the anticipatory pattern, first the theory later the charts... cheers Walter.

Classic M.xls

[torero 10]

Nice explanation with good VA. It's true that I need confirmation to take the short in the chart given. Why? Because I don't have a clue where my stop is or should be in the chart when the second top is not even finished yet. As mentioned earlier, I'm a freak with stop losses, so I have to see it to calculate the R/R. If I don't see the nearest top and I have to guess, then I'd rather stay on sidelines until the confirmation is shown. I assume you have an idea where your stops are, so I'd like to find how you use it.

[Guest scalptrader]

I used to trade this M pattern years ago. Its a reliable pattern, and works on any compression. Its basically a double top formation, you are looking for a trend to reverse, and the best variation is when the first peak is "just violated by a few ticks". This method used to be the bread and butter of many floor trades in the 80's.

 

To make this yous bread and butter do the following exercise:

 

1. On mini's, (or any symbol), intraday, look for peaks which are the highest high for a minimum 1 hour before and 1 hour after it was formed. (very important time factor)

 

2. Look for a violation of this peak, by just a few ticks. (less than Vn) Your confirmation is any bar that closes below its own mid range (price action confirmation) after violation is made.

 

3. Stop loss, or reverse, is about 1 to 2 points above the peak depending on the market. Move it to top of the entry bar after the low was taken out and soon after to breakeven.

 

4. Works for stocks and forex.

 

5. Daily bars use 3 days on each side for time factor.

 

Exits, let the profits run!

 

This is purely a price action based method, and will give you better than 70% odds of hitting at least break even. Great for discretionary trader here. It happens a few time every week on the mini's and there are many opportunities in stocks and forex markets too! Filter them with 4 bar RSI in extremes, even better but less trades.

 

I left it semi complete but the core of the concept is here!

 

There is no luck in this game, just pure sweat and blood.

[torero 10]

Great contribution, scalp. One question: any volume we should be looking out for? About using tick charts?

[Guest scalptrader]

The method posted, lets called it MW Pattern, no volume confirmation is needed. Price should be enough, thus is up to you how you modify this. Just remember the more variables you add, the less trades you will get...

 

The opposite to this logic, the W formation, is valid for buys. M for sells.

 

You can use tick charts, or anything else, key here is the time factor. Ill find some samples examples and post them shortly.

[walterw 10]

Thanks Scalp for contribution, you will see on the next posts ahead as I explain my aproach that I take much smaller M`s than the ones you mention... any way we must always have in mind that technical analisis is the same in any speed universe... (so we must trade on the speed universe that we feel confortable ) this method can be applied from tick charts all the way to weekly charts if you wish...

 

Ok... now that I explained the theory of the M pattern I will now explain the LEVELS I use for my trading and how I trade from does Levels... In terms of levels you can use fixed (mp, pivots, fibonnacci, etc) levels or dynamic (bands, market thresholds,etc) levels... in my experience dynamic levels became much easier and flexible than fixed levels... I DO believe in fixed levels but some of the drawdowns of fixed levels is that it leaves lots of good oportunities on the table because you didnt have any "reference level" in that place to trade, for example, an MP level derived from yesterday action that is too far from todays price action becomes useles on todays session, or you got a pivot too far from this actual excellent oportunity... so I do believe in fixed levels, but I simplified my life to some very simple and straightforward dynamic levels that really perform very nice...

 

My methodology was originally inspired on John Novak (nexgen) aproach, I never was able to purchase his software because it costs 9k , but they are enough generous to share a lot of educational material for free... their site is Fibonacci Day trading software - NEXGEN Software Systems now apart from his fibonacci indicator (propietary) I did find that the rest of the indicators are of public domain (averages, bands, etc.. ) so I did build my own (very similar) and began re-adapting a method of my own based on some good sound principles being thought by Novak... I Think I got something that its not the same but works pretty good...

 

My base speed universe is 110T on russell emini... (same as Novak`s) the curious thing and maybe new for most of you is that I use a 22T chart and a 3T chart ¡¡¡ (this guy is crazy) i:confused: yes I am... but you will find out that the spirit of the trade is at 110T chart... amazingly I discovered that noise some times can be very Usefull ¡¡ :rolleyes: now lets leave that for other post and lets get back to the level topic again... I attach a Chart of a 110T russell with my dynamic levels (Trend Bands)... and I attach also a theoretical explanation of how I use this dynamic levels... in further posts we will get inside the M aproach with detail... cheers Walter.

Trades from Dynamic Levels.xls

[fatdog1 10]

Hi everyone,

 

I want to add a bit to the discussion if I may. I am a discretionary trader only because I am not able to code what I do. I totally agree with Ant about the entry being as early as possible so as to reduce the initial risk. I also agree that with my method automated, I will miss many entries because the price will not reach the area exactly where I have my entry order placed. Mostly, a different index will reach an area of demand or supply and turn and take the rest of the indexes along with it. That happened at the end of the day with the S & P's. My entries are in areas of supply and demand which is price based only. Since it is price based, it does not lag or require math formulas.

I am able to find areas where price will turn consistantly with no doubt in my mind that until the area is absorbed, the laws of supply and demand will force the vertical move to cease, and the horizontal move to absorb the area to begin. In fact, I can post a Tradestation chart of any market you wish with areas of supply and demand marked off with horizontal lines with alerts. You will be able to observe in real time the market trade between the areas of supply and demand until either the supply is absorbed and the price moves higher, or the demand is absorbed and the price moves lower.

I will have additional areas of each marked off on the chart for when the original areas are absorbed. When price reaches the next area, the new trading range will be established.

If you can combine the Market Profile with what I do, it will lead to a more robust trading system. You will know when a trend day or a range day is likely by how many times price visits a level on either end of the Profile. The first time to an area is the highest odds, lowest risk trade. The more times a price visits a level of demand, the odds are reduced that there will be willing buyers at that level and the same for sellers at areas of supply. Once the area is absorbed, price moves on to the next area. The Market Profile shows these areas as vertical moves or horizontal rotations. In addition, P shaped rotations are near areas of supply being absorbed, and B shaped rotations are near areas of demand being absorbed.

Put the two together, and watch what happens to the Profile when the price reaches the areas I mark off. If it is the first time, it should be a normal bell curve Profile. If it is the second or third time, watch for the area to be absorbed by the shape of the Profile.

I have a screen shot of the S & P's below. I can't post a TS workspace here.

If someone here can help me code the patterns, then the lines could be added to the chart like the HVA and LVA are now.

 

Happy New Year everyone,

FD1

[torero 10]

Hi FD1, can you post one of @ER2? I'd like to see your observation on it. Since I'm still a newbie with MP, I would like to see what the experts out there use MP to trade properly. Thanks.

[fatdog1 10]

Hi FD1, can you post one of @ER2? I'd like to see your observation on it. Since I'm still a newbie with MP, I would like to see what the experts out there use MP to trade properly. Thanks.

 

Torero,

My observations on the areas of supply and demand for the Russell are below. The daily Market Profile will form on Wednesday between these areas.

That is the extent of my expertise in using the Market Profile. I use the Profile to observe what kind of bell curve forms, and where it forms so as to guage the likelyhood of a trend move once an area supporting or resisting the Profile is absorbed. For instance, on the Russell, I am looking for the area at 792.20 to act as support on Wednesday morning. The Russell has been in the area of demand at 792.00 already on Friday afternoon and it bounced 4 points off the low before selling back down near the day's low by the close.

It is possible on a selloff that the Russell could extend the range down to 790.40 which is a breakout line out of a trading range from the 21st and 22nd of December. I don't trade pullbacks to breakout lines that occur far away from the point of imbalance which is 786.77. There are no guarantees that there will be willing buyers that far away from the actual area of demand. The tape would have to get real positive near the 790.40 area for me to take a long trade there for confirmation. It is possible that the Russell could visit the area in the premarket too. If the Russell rotates back up to the 792.00 area after touching 790.40 in the premarket, I would be interested in a long position using the tape. The next breakout line at 787.36 is very near to the point of imbalance at 786.77. If there is an extreme selloff on Wednesday, that is the next place I will establish a long position without confirmation.

On the top, I am looking for the Russell to trade up to the 799.60 -800.00 area. I will reverse to a short once that area is reached since it is the first time back to the area of supply. My first target is 792.00.

A couple of possibilities for the future.

Once both areas at 792.00 and 799.60 are touched, (792.00 has been already) we will see if a downtrend will begin, or if the Russell will again trade near the area of supply and form a P shaped bell curve indicating a move to the old highs. However, a B shaped bell curve near 792.00 means we visit the 786.77 area, and I hang on to the rest of my short.

[torero 10]

Thanks. I'll keep that in mind. I am curious as to why you use 60min while the others use 30min to set up their MP.

[fatdog1 10]

Thanks. I'll keep that in mind. I am curious as to why you use 60min while the others use 30min to set up their MP.

 

Torero,

 

My trading style is simply this: I am a buyer at this price, I am a seller at this price. I use daily, weekly, 240, and 180 candlestick charts to find the big range areas of supply and demand that I expect the price to trade between. For the actual entries, I use a 60 minute candlestick chart to find the small range areas of supply and demand that I want to trade between by going long near demand and short near supply. Today is Monday, and I am planning to trade the Russell on Wednesday between 792 and 799 because the demand is near 792 and the supply is near 799.

 

The areas I speak about have nothing to do with Market Profile at all.

If the price trades between 792 and 799, the Wednesday Market Profile will automatically form between those two prices.

I use the Market Profile to tell me if a range day or a trend day is likely by the shape and location of the bell curve and the POC.

If a B shaped Profile forms near 792, then it is possible that a trend move lower could occur when the number of willing buyers drops to zero and a imbalance in the supply demand equaision occurs.

 

The possibility of a trend move lower exists because the 792 demand area is not peak demand anymore. Peak supply and demand are areas that price has not revisited since the initial imbalance in the supply demand equaision. The 792 area was revisited on Friday afternoon. That was the highest odds, lowest risk long entry at 792. It also happens to be the bottom of the Market Profile from Friday. It was the area of peak demand which shut off the selling and forced the rotation higher before the close.

 

I would still trade long again at 792, but, like you, I will now need confirmation before I enter a long trade. Like SoulTrader, I will use the tape before I enter to determine if there are buyers left at 792.

 

If the range is extended lower, I would next be a buyer near 786.77 which is the next area of peak demand. I don't need confirmation to enter long here.

My first target would be 792 where an imbalance in supply and demand will have occured if we trade below 792. I won't short 792 since the areas of supply and demand are close together, but I will move my stop to even on the rest of my position in case price revisits the 786.77 area.

 

I will still be a seller near 799 which is peak supply if it is reached on Wednesday or any other day as long as the distance between the areas of supply and demand are at least 3 to 1 at the time that price revisits 799.

 

Hope this helps.

[torero 10]

So far, your explanation makes perfect sense. But I see a few things unanswered. How do you determine where the peak demand or supply is? From MP? Price-by-volume indicator? And how do you determine the low/high zone where to place your stop when you go long on peak demand area or short on peak supply area? How do you make the entry? When momentum reverses in the opposite direction. Say, when and if it hits 787.6, do I wait for the next bar to go higher than the previous bar to go long?

 

The other question is, from last Friday's MP, I see a P shape, so this means that 792 is not absorbed yet but it's no longer peak demand area correct? Since we don't know what Wednesday's MP shape will be, we expect Wednesday to be in 792-799 action seeing Friday's MP shape?

[torero 10]

One other question? How many days must go by before the peak demand is disqualified as peak demand? Is virgin POC important?

[fatdog1 10]

One other question? How many days must go by before the peak demand is disqualified as peak demand? Is virgin POC important?

 

Very good question with a two part answer.

Peak demand and supply is peak until the first time price revisits the area.

There are areas of peak supply in the indexes like the S & P and Nasdaq from the bubble that have yet to be revisited. There will still be sellers when price revisits those levels. I find those areas on weekly and monthly charts.

Even though the Dow and Russell are near all time highs, they won't be able to advance very far without the S & P and Nasdaq advancing as well, and they will sell off when the S & P or Nasdaq comes into a large enough area of supply. On the rise from the July lows, areas of peak demand formed that will produce bounces when the price revisits them in the future. There are also areas of peak demand from the 2002 lows that will produce bounces should the market ever test those lows. The second part of the answer is to determine who is in control of the market now and try to trade with them. The market is making new highs, so I am buying pullbacks to areas of peak demand as they form. Once the current uptrend ends, I will switch over to shorting pullbacks to areas of peak supply as they form. The first chance to find out if the uptrend is ending is when the Russell trades up to the 800 area which is a area of peak supply that has recently formed.

[fatdog1 10]

So far, your explanation makes perfect sense. But I see a few things unanswered. How do you determine where the peak demand or supply is? From MP? Price-by-volume indicator? And how do you determine the low/high zone where to place your stop when you go long on peak demand area or short on peak supply area? How do you make the entry? When momentum reverses in the opposite direction. Say, when and if it hits 787.6, do I wait for the next bar to go higher than the previous bar to go long?

 

The other question is, from last Friday's MP, I see a P shape, so this means that 792 is not absorbed yet but it's no longer peak demand area correct? Since we don't know what Wednesday's MP shape will be, we expect Wednesday to be in 792-799 action seeing Friday's MP shape?

Hi Torero,

I missed this post the first time, sorry:

 

"How do you determine where the peak demand or supply is? From MP? Price-by-volume indicator?"

 

I look for areas where there are imbalances in the supply demand equasion that are continuation areas in the current trend. Best way to describe this is a consolidation area preceeded by a up candle in a uptrend or a consolidation area preceeded by a down candle in a downtrend.

Let's use the 787.36 - 786.77 demand area as an example. I opened the screen shot to see the area so as to describe the area and the potential long trades better from the picture. There is a small area of peak demand at 786.77 and also a breakout area at 787.36. This means there could potentially be a trade near the 787.36 breakout line and another near the 786.77 peak demand area as well. Since after we based for a period of time on 12-22-06 between 785.50 and 787.36 we then went higher, there were

more buyers than sellers at that 787.36 level and therefore an imbalance in the supply demand equasion. The number of sellers dropped to zero at 787.37. That can be the only logical explaination for why prices traded higher.

It stands to reason that there will be willing buyers left behind wanting to buy when price trades there in the future. I don't use MP and a volume indicator to determine that. I just use the candles. That big candle tells me there was a lot of demand at that price.

 

"And how do you determine the low/high zone where to place your stop when you go long on peak demand area or short on peak supply area? "

 

To determine where to place a stop loss, I look at the size of the area where supply and demand was in balance before the move higher and place a stop loss below the low of the area for a long. For a short near supply, I place

the stop above the high of the consolidation area. I make the entry with either a limit order at the price where the imbalance occured if the area is peak demand, or a buy or sell stop if the area is not peak, or if it is a breakout of a trading range that formed after a sell off.

 

" How do you make the entry? When momentum reverses in the opposite direction. Say, when and if it hits 787.6, do I wait for the next bar to go higher than the previous bar to go long? "

 

Let's separate the two possible trades in the picture.

I re-read my post from Sunday and looked at the picture and I amended the 787.60 price to 786.77 for the area of peak demand. I will use a limit order at 786.80 and my initial stop loss will be 785.40 for that trade.

It is very possible that the price will turn higher when it hits the 787.36 breakout line. I will place a buy stop at 787.50 or 787.60 if that line is hit to catch the reversal and I will watch the tape for buyers.

 

"The other question is, from last Friday's MP, I see a P shape, so this means that 792 is not absorbed yet but it's no longer peak demand area correct? "

 

Correct. It is not absorbed until price closes below the 792 area on the 60 minute chart and it is not peak anymore.

 

"Since we don't know what Wednesday's MP shape will be, we expect Wednesday to be in 792-799 action seeing Friday's MP shape?"

 

There is no way to determine the shape of the Wednesday Profile from Friday's. If the price trades between 792 for the low and 799 for the high, it could be a normal profile if the price rotates in the middle of the range, or a P shape if the price hangs out near the 799 area of supply, or a B shape if the price returns to the low of the day and rotates there.

[torero 10]

Thanks for the thorough answers. I'll reread it to get more questions.

 

Another question: "I use the Market Profile to tell me if a range day or a trend day is likely by the shape and location of the bell curve and the POC.

If a B shaped Profile forms near 792, then it is possible that a trend move lower could occur when the number of willing buyers drops to zero and a imbalance in the supply demand equaision occurs."

 

So you're saying here if Wednesday is a B shape, then Thursday is a possible down trend day? So is there an inference that if the previous day has a B shape, chances of a trend break to the downside likely and if previous day with a P shape, an upward trend likely?

[fatdog1 10]

Thanks for the thorough answers. I'll reread it to get more questions.

 

Another question: "I use the Market Profile to tell me if a range day or a trend day is likely by the shape and location of the bell curve and the POC.

If a B shaped Profile forms near 792, then it is possible that a trend move lower could occur when the number of willing buyers drops to zero and a imbalance in the supply demand equaision occurs."

 

So you're saying here if Wednesday is a B shape, then Thursday is a possible down trend day? So is there an inference that if the previous day has a B shape, chances of a trend break to the downside likely and if previous day with a P shape, an upward trend likely?

 

That is what a trend continuation move will look like on a MP.

The people who trade with the Market Profile noticed the P and B shapes before trend continuation moves and have written articles about it.

If the price hangs out near 792 on Wednesday, it will mean that the demand at that level is being absorbed. If there is a close on a 60 minute chart below 792 then the number of buyers has dropped to zero.

[walterw 10]

Fatdog, in order to keep the spirit of this thread, could you refer with more detail how would you manage Risk Reward Ratio on this setups you trade ? in this thread we are VERY interested about having tight stops vs large profits... doesnt care much wich technique you use... we believe that any technique properly handled should gives a good RRR... so please refer more clearly to this RRR topic on this thread... thanks Walter.

[walterw 10]

Ok.... I keep presenting my aproach that leads me to a good RRR.... and this is M trades from my dynamic levels...

 

I previously presented the advantage of M patterns in order to have a good RRR and I did present what levels I take into consideration (Outerbands and Mid Band) and what I do from there (Refresh to the mid band, Reject of the mid band ) now I present how I combine M patterns in this entire context.... I attach a Theoretical explanation...

 

What we basicly want is this M formation at the outerbands in order to refresh to the mid band "Refresh Trade", and we want this M formation at the mid band in order to reject to the outerbands "Reject Trade" ....

M Trades from Dynamic Levels.xls