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The Shawshank Redemption


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The Shawshank Redemption

  #1 (permalink)
 
babypowder's Avatar
 babypowder 
Brooklyn, NY
 
Experience: Beginner
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Hey futures.io (formerly BMT),
I'm joining the contest that begins June 1st, I'll give my best to post everyday till the end of the month. I love using trendlines it helps me read the market structure easily. Remember TL's is the me as EMA 20 is to most retail traders, its there to make things visually simpler. Back to the task at hand. This trading concept I've read before but it was during my early years of looking for the perfect indicator so it was in my useless bin. But as I developed w/ TL's sure enough I begin using it without notice. Its used by many futures.io (formerly BMT) members.

TRENDLINE BREAK , yes just like the movie we are looking for a BREAK.

1) Draw a nice diagonal TL after the 1st leg/LH or HL with a fib retracement between 38-50-61%.
Rule 1 - babypowder's library then the TL Rule 1 - babypowder's library
2) Look for a double bottom/top and/or HL/LH with fib retracement between 61-78%.
Rule 2 - babypowder's library
3) Look for a clear BREAK of the TL.
Rule 3 - babypowder's library
4) Once broken look to enter on a pullback/HL or LH (I prefer) or on the break of the TL with stop loss at rule #2.
RULE 4 - babypowder's library

See attached example of the 6E- 60min chart ( 2011-05-30_0949 - babypowder's library ).

How Price Action/Market Structure comes to play for each rule:
1) Fib levels are not absolute but if the trend does not give me a retracement in the 38-50-61 area then this tells me.
a) The Trend is strong in that direction; drawing a TL lower then 38 fib will give me a steep sloped TL which I don't like only nice even diagonal TL's.
b) The Trend is not a trend but maybe in consolidation; drawing a TL above the 61 fib may look too horizontal changing my strategy from trend to range but that's another thread.
2) This rule is self explanatory a HL/LH or double bottom/top signalize a potential change of the current trend.
3) Look for a clear break (discretionary); I personally like to see a complete candle close above/below the TL or nice pin bar away from the TL. Again the futures.io (formerly BMT) community can participate an we can discuss this further here.
4) Once all 3 rules are met; we like to see and enter on a pullback to the new direction or enter on the break of the TL. Some things to keep in mind;
a) the market may run off and not give you a pullback entry but by doing so you get a better entry and you lessen your risk.
b) by entering on the break of the TL your risk is higher but you may catch a runner. Remember there are traders making money only being 40% correct it all comes down to your style.

Money Management and entry points can be discussed as a group, being that there are varies ways to go about this. The methodology I've only used in higher time frames and will post different time frames in the coming days.

Happy Trading,
BP.

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  #3 (permalink)
 supermht 
Naperville IL
 
Experience: Intermediate
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Wow, thank you so much for the detailed information, on 6E chart, if price is back to LL to form a double bottom or overshoot a little bit, is it eligible for your setup?

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  #4 (permalink)
 
babypowder's Avatar
 babypowder 
Brooklyn, NY
 
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Thanks supermht,
If price does make a LL/HH then yes the setup is void. Price is still trending and has not given us any indication of change.

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  #5 (permalink)
 
bluemele's Avatar
 bluemele 
Honolulu, Hawaii
 
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How come you don't post your images directly in the post?

I am lazy I guess, so to look at a different page then flash back-n-forth etc..

Just curious why you do not.

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  #6 (permalink)
 
babypowder's Avatar
 babypowder 
Brooklyn, NY
 
Experience: Beginner
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Sorry Blue,
Show me how and I'll see if i can adjust. Just got use to doing it this way.

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  #7 (permalink)
 
redratsal's Avatar
 redratsal 
Milan (I)
 
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Hi,

Thanks for posting your method this is a wiki on how to capture screen-shots How-to Capture and Upload a [AUTOLINK]Screenshot[/AUTOLINK] - Big Mike's Trading Forum

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  #8 (permalink)
 
Big Mike's Avatar
 Big Mike 
Manta, Ecuador
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Thread Moved


Thread moved to Traders Hideout (from journals) so it can qualify for iPad 2 contest



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  #9 (permalink)
 
babypowder's Avatar
 babypowder 
Brooklyn, NY
 
Experience: Beginner
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Hey all,
I edited the 1st post forgot to include the .61 fib. The purpose is to draw a nice sloped trendline. I like to see a pretty picture. Today I've attached a TL break CL examples with price action breakdown and targets and stops.

CL-30 min chart, TL break example. DAY 1 - babypowder's library
*same chart with price action breakdown. Day1 - babypowder's library
*same chart with target and stop. 2011-06-01_1950 - babypowder's library

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  #10 (permalink)
 
Big Mike's Avatar
 Big Mike 
Manta, Ecuador
Site Administrator
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Swing Trader
 
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Tip


This thread is part of our June iPad 2 contest!

For all the details on the contest, visit this link:


nexusfi.com (formerly BMT) members will vote for the winner at the end of June.

Thanks for participating, @babypowder!




Mike

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