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Oct 29, 2011
Price Pattern and Position (3P) Trading System
With Exit Strategy at Minimum Price Target
Part 1 – Trend Reversal Conditions for Trade Setup
1. Trade in the direction of the larger time frame indicator unless it is in the
OB or OS zone.
a. OK to go short on smaller time frame indicator bearish reversals if the higher time frame indicator is Bullish but OB.
b. OK to go long on smaller time frame indicator bullish reversals if the higher time frame indicator is Bearish but OS.
2. Identify the probable pattern position.
a. Is the market making a trend or a correction?
b. What is the position of the market within the probable pattern?
3. Identify S/R or EOW price zones.
4. A trend reversal trade should be considered if at least two of the three trend/momentum, pattern and price factors are in a position for a trend reversal.
Part 2 – Objective Trade Entry
1. Trail a buy/sell stop one tick above/below the 1BH following a smaller time frame indicator reversal.
2. Place the initial protective sell/buy stop no more than one tick below/above the low/high made prior to entry.
Part 3 –Exit Strategy: ½ Positions at Minimum Target
1. What is the minimum pattern anticipated to follow the trade entry?
a. If there is a clearly defined E-wave pattern, what specific pattern should follow?
b. If there is no clearly defined E-wave pattern, should a trend or counter trend pattern follow?
2. What is the minimum price target anticipated if correct about the trend and pattern position of the market?
3. What is the typical price target that should be reached if incorrect about the trend and pattern position of the market?
4. Trail the protective stop very close to the market on ½ of the position if the min price target for 2.a is reached.
Part 4 – Exit Strategy: Second Half of the Position
1. If a clearly defined E-wave pattern develops, adjust the stop on the second half of the position no further than a pattern reversal signal.
2. If no E-wave pattern, only trail the stop close to the market if the higher time frame indicator reaches the OB or OS zone.
a. Adjust the stop no further than one tick below/above the high or low made prior to a lower time frame reversal once the higher time frame reaches the OB or OS zone.
b. If the higher time frame indicator is in the OB or OS zone and price is at a S/R target, trail the stop one tick above/below the 1BH or L following a smaller time frame indicator reversal.
Nifty Weekend Analysis-29Oct2011
Towards upside 5410, 5480 and 5560 would be the immediate resistances and towards
downside 5240, 5200 and 5150 levels would be the support.
Oct 25, 2011
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