This is a very simple early entry Swing Trading system.
The only indicator used is the Chaos Fractal.
[B]OVERVIEW[/B]
- Trades on the 30M to H4, Daily, Weekly and Monthly Charts.
- Lower Risk Entries.
- Higher Reward.
- Trades last typically 1 day to 1 week.
- Fibs are used to identify take profit zones.
[B]Long Setups [/B]
There are two types:
- Pivot Swing Low Buys
- High of a Higher-Low Candle
[I]Pivot Swing Low[/I]
Where the market, after a drop, creates a low, then a lower low then a higher low.
The high of the pivot low candle becomes support, when broken, which we buy.
[I]High of a Higher-Low Candle[/I]
When a fractal low is created after a drop, followed buy a higher fractal low, the high of the higher-low candle becomes support, when broken, which we buy.
[B]Short Setups[/B]
There are two types:
- Pivot Swing High Sells
- Low of a Lower-High Candle
[I]Pivot Swing High Sell[/I]
Where the market, after a climb, creates a high, then a higher high then a lower high.
The low of the pivot high candle becomes resistance which we sell.
[I]Low of a Lower-High Candle[/I]
When a fractal high is created after a climb, followed buy a lower fractal high, the low of the lower-high candle becomes resistance, when broken, which we sell.
[B]Profit Targets[/B]
For buying markets, fib the high to the low of the last swing.
For selling markets, fib the low to the high of the last swing.
TP1=144%
TP2=210%
TP3=233%
TP4=261.8%
TP5=377%
[I][B]Please note that you will at times need to wait for a swing to develop in the favor of the setup before you are able to fib.[/B][/I]
[B]When to Take Profit and When to Let-It-Run[/B]
If you are in a buying market and lower highs begin to be created, followed by at least one lower low, exit or lock in profit on the test of the last high.
Similarly, if you are in a selling market and higher highs begin to be made followed by at least one higher low, exit or lock in profit on the test of the last low.
Let it Run when the trend is up and you are still getting BUY setups off higher lows or when the trend is down and you are still getting SELL setups off lower highs.
[B]IMPROVED ENTRIES, STOPS & TAKE PROFIT[/B]
[B]Please see post #157[/B] ,[B]post #158and post #159 for examples*[/B]
So far we have only been using the support or resistance of PVSL/HL, PVSH/LH candles for entry. However, of importance is the use of the fib levels between 0% and 100% for entries. So let’s see how it works.
The 89% and 11% act as support and resistance Levels of a swing and give very low risk entries, since an entry on the 89% means that your risk would be a little above the 100% or a little below the 0%.
For the purposes of this method we will use the 11% for entries and target the 89% through to 377% for take profit. This is best applied on the 30M H1, H4 and bigger timeframes.
[B]LONG SETUPS[/B]
- The market is selling and creates a BUY candlestick pattern.
- Immediately fib from the high of the previous high to the current low created at the BUY candlestick pattern (this will be a swing)
- Enter on a retrace to the 11%
-
Place stop 8-10 pips below the 0% - Breakeven once the 55% is hit
- TP 1=89%, TP2=100%, TP3=144%, TP4=210%, TP5=233%, TP6=377%
- Repeat these steps for every swing.
[B]SHORT SETUPS[/B]
- The market is buying and creates a SELL candlestick pattern.
- Immediately fib from the of the previous low to the current high created at the SELL candlestick pattern (this will be a swing)
- Enter on a retrace to the 11%
-
Place stop 8-10 pips above the 11% - Breakeven once the 55% is hit
- TP 1=89%, TP2=100%, TP3=144%, TP4=210%, TP5=233%, TP6=377%
- Repeat these steps for every swing.
[B]Key Notes:
- The 89% and 100% are the most reactive levels.
- Why use PVSL/PVSH/LH/HL? Because sometimes the candle pattern created closes too far away from the 11% to facilitate retracement.
- Once there is a breaking of or closing above the 55%, move your stop from breakeven to about 25-30%. Other adjustments are at the trader’s discretion
- The most successful trades beyond 100% are in favor of the trend
-
The smaller the swing the more targets will be hit and vice versa.
[/B]
[B]PIVOT SWING REVERSE TRADES[/B]
So far we have looked at selling Pivot Swing Highs (PVSH) in down trends and buying Pivot Swing Lows (PVSL) in up trends.
What we will now be looking at is:
- Using PVSLs and PVSHs to spot and catch reversals.
- Using Old PVSHs to spot entries in a uptrend and Old PVSLs to spot entries in a downtrend.
[B]Spotting Reversals[/B]
When the market has peaked at buying, this is usually indicated by a number of BEARISH candlestick patterns (which form PVSHs) and sometimes no significantly higher high. Additionally in the midst of these Bearish patterns, you will often notice a PVSL pattern, which is the bulls final attempt to force buying continuation. However buying fails, and then the high/open/close of that PVSL becomes an extremely strong resistance point that triggers selling. The reverse applies for when selling troughs (bottoms).
[B]See Examples[/B]
[B]Using Old PVSHs and PVSLs for Entry[/B]
When the market is trending down and creating PVSHs, these levels create significant resistance levels to allow selling to continue. Similarly, when the market is trending upwards and creating PVSLs, these levels create significant support to allow buying to continue.
When the Selling ends or pauses, buyers use the PVSH resistance levels as support to facilitate buying. Conversely, when buying ends or pauses, sellers use the PVSL support as resistance to facilitate selling.
[B]See Examples[/B]
[B]Please also read this post on the “MARKET’S GENERAL REACTION TO SUPPORT & RESISTANCE”[/B]
[B]Let’s Trade!!![/B]
