There is a lot in this next 5 minute chart so we need to take it carefully >>>
By
tymen1 at 2008-06-07
The short entry is a A (76) for 1 amount.
It becomes a
retrace first trade as the price action goes long to B (86). The trade is considered a medium risk trade as the upper Bollinger band is going down at the 3rd candle.
You, therefore, have the choice of setting the stop loss at 90, which is the top of the body of the red candle - or at high risk which is 3 pips above the top of the star at 01. The top of the star is 98.
The retrace points are basically found as follows :
Starc going down - retrace comes near or tags the upper Starc.
Starc going up - retrace goes thro Starc and wait some 3/4 candles as the candles walk the upper Starc band.
Exits are taken when the price action well and truely goes thro the
lower Starc band.
So.......................
At B(86), we enter the 2nd amount and the computer averages our short entry to 81.
It does not take long for the price action to go down and we hit C(58).
But if you are smart, you will see that the
bands are going down and the middle BB is going down also.
This means that the price will go down also and D(40) becomes the next solid exit point.
Even at point D the bands and middle BB are still going very much down, giving confidence that the price action will
continue to go down. There is an initial scare as 2 green candle appear after point D.
We continue to
toggle to the main chart because the price action has now well and truely passed thro the lower BB on the main chart. We cannot go too much further because the trade will get too long in the tooth.
E (21) is our next port of call. If we exit here then a re-entry of 2 amounts could be taken at retrace point F(48). If we did not exit here and looked at the bands going down then G (03) becomes an end point.
Lets look at some figures.
The minimum profit is............Entry 1 amount at A, add 2nd amount at B, exit 1 amount at C, 2nd amount at D.
That is 81(av)-58 = 23 pips for 1st amount.
and.....81 (av)-40 = 21 pips for 2nd amount.
Total = 44-spread (6) =
38 pips profit.
The maximum profit is.............Entry 1 amount at A, add 2nd amount at B,
exit 1 amount at E,
add 2nd amount at F,
exit both amounts at G .
That is 81-21 = 60 pips for 1st amount.
and.....81-03 = 78 pips for 2nd amount.
and ....48-03 = 45 pips for 1st amount re-entered on retrace at F.
Total = 183-spread (9) =
174 pips profit.
Stop loss.........At 102.01-entry at 101.76 =
25 pips for high risk.
Stop loss.........At 101.90-entry at 101.76 =
14 pips for medium risk.
Risk/reward ratio :
Maximum........14:174 = 1:12. That is absolutely excellent.
Minimum.........24:38 = 1:1.6 That is good.
A bit of work and you could have done better than the minimum.
The massive profit potential will now lead us to discovering the new trading approach which will bring in huge pips in a very short timeframe!!
His site is candlestickforum.
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