Above is the SP500 on the 4-hour time-frame, with Heiken Ashi Smoothed price bars and my ratio indicator applied.
Buy signal:
(1) Ratio crosses-down while Heiken Ashi Smoothed is blue, or
(2) Heiken Ashi Smoothed turns blue while ratio already crossed-down.
Sell signal:
(1) Ratio crosses-up while Heiken Ashi Smoothed is red, or
(2) Heiken Ashi Smoothed turns red while ratio already crossed-up.
Very clean. Very simple. Easy to know which way to trade next!
Managing Trades and Money
Logical entry and modified stop-loss points, as well as add-position opportunities, can occur over the duration of a price trend.
All the risk is in the Entry stop-loss, but this is significantly reduced at Modify 1.
On the next red Heiken Ashi Smoothed price bar, I modify the stop-loss and add a sell trade (Add sell 1). Both initial trade and Add sell 1 have the same stop-loss.
At the next red Heiken Ashi Smoothed price bar I do it over again. Modify 2 and Add sell 2.
Modify 2 locks-in open profit between entry price and stop-loss price on all existing open trades. Risk on acc. balance is now zero, but open profit is guaranteed by the stop-loss.
At the next red Heiken Ashi Smoothed price bar I do it over again. Modify 3 and Add sell 3. Look at the amount of locked open profit between the First entry and Modify 3.
So, even though Add sell 3 results in a loss when it triggers the SL, this is very easily absorbed by locked open profit across the first and second trades. Move on.
In a nutshell, that’s it!
Gaz.
