I have decided to start writing my blog again as I feel it helps my thought process and question my trading in a good way. When we are sharing things, we check it makes sense and for me it further enhances my understanding of what I do and do not know.
Without this process I find myself almost trading on autopilot and not really checking how setups relate to my plan. So I will continue to blog to aid with my own development and if it helps others, great.
I now try to trade with Monthly and Weekly larger moves, and look for setups within this on the daily time frame.
I tend to take setups at Key support and resistance levels with confluences from trend lines, liquidity hunts (stop runs) and occasionally a moving average.
The two setups I will be trading are Bearish/Bullish engulfing candles and a 3 candle setup, which involves lower lows for sells and higher highs for buys.
Engulfing
Key Features of an Engulfing bar ( for me)
- Body of candle 2 closes below open of candle 1 for sell
- Body of candle 2 closes above open of candle 1 for buy
- Price is at a Key level
Other confluences which can aid:
- Liquidity has been taken
- With Trend
- At a Trend line for confluence
- Volume of candle 2 is higher showing more activity and a strong response.
I then mark the body of candle 1 with a fibonacci and mark 50% of the candle. I find that on successful trades, often price comes back to this level before rejecting further.
I am in the process of collecting stats on a 50% entry as a limit order compared to just trading after candle 2.
There are several options however –
- Entry after candle 2 formed.
- Limit order at 50%
- Watch 50% and wait for further rejection at this level
Of course you may miss many setups by waiting on 50%. However, the Risk reward ratio is much better, and quality of trades is better than quality.
I have added an image showing a confluence of factors which personally gives me more reasons to enter a trade.
Rather than just trading a specific pattern, I try to look for a series of reasons and confluences.
Getting out of a trade is always the trickiest part in my opinion. The next Key level of trouble area has a higher chance of success, but I like to try and stay in when a trend is on my side until it is broken.
This is more often than not easier said than done and one part of my trading I am working to improve.
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