Sunday, April 3, 2011

Trading Plan: 5 entry methods all rely on price action









The basic idea is to enter at a price level that is not normal e.g. large trades moved the price to a level that is way off the price where the most volume was traded (green line on my chart)
  • Sometimes a market is simply overbought (no higher volumes on new 10 min bars are made), by comparing instruments like the FDAX and Stoxx 50 (FESX) its clear which market to trade as one has clearly more potential (distance to a prior high volume price) than the other.
  • Its makes sense to trade the different strategies with the high volume 10 min price bar in mind as it provides a clear support / resistance level.
  • Before making a trade on the stock market indicies check if the fdax, stoxx 50 or nasdaq provides a better risk reward
From the 5 entry spots I use:
  • Timed Entry (price breaks above a 10 min bar at a certain time of the day)
  • Trend Entry (closing price is higher than prior closing price after a decline)
  • Main Trend Entry (after 4.00 am I go long if the price is above 144 EMA line)
  • Entry after Pullback to 50% of prior days range
  • Oops Setup (Against the false breakdown: Price was below prior closing/low price and now goes up again)
all entries rely on price action to work therefore I wait if i get an entry signal on the 10 min chart for a confirmation of the price action on the 1 min chart. E.g. price has to slow down and move up before I enter, this way I never catch a falling knife :-)

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