This strat is based on how fast or slow price moves (aka Momentum), thus helps you to learn various price actions in a different way. If we have to compare how fast or slow price is moving, we have to compare it against something. I'll use a VC indicator for that purpose.
Basically Any TF, I use this strat on M1 chart, M5 chart, even some H1 chart doesn't fail me either.
- A clean Chart.
- An Oscillator type indicator, possible choice are VC, RSI(3 or 5 applied to close), Stoch, TDI etc.
- Basic PA knowledge(Like Support Resistance etc).
You can Add Fractals/Some SR indicators etc, but keep it clean. I prefer VC(Value Chart), if not then RSI.
Please don't worry about the settings too much because there are no optimal settings. You can just use the Hubba Hubba Strategy template for this strat. It doesn't matter. You just need visual confirmation.
- Find a nice price moment in one direction.
- Then look for price to retrace very little like 25%-50%.
- Look for confirmation: Look at the VC for confirmation. Look if its hitting some possible SR zone or some TL or making divergence.
- Trade for 3x your TF.
A friendly warning, do demo, do learn. But use your real money, and it'll burn. ...
Explanation with example: (For the sake of explanation, I'll assume that we are looking for a CALL)
- Price is going slowly upward, VC says Overbought after a while, you are like you almost want to do a reversal trade.
- Then price suddenly pulls back to 25% to 50%.
- There is a possible SR zone. I can see some kind of Divergence as an extra confirmation, but thats not necessary.
- Look at VC, it's almost OS in a few candles while it took more candles to be overbought. Here, VC moved too fast from OB to OS and price moved very slow compared to each other.
- I do a nice 15m trade.
Here, more examples:
- Price went oversold, then it continued further down. We wait for the price to suddenly go near overbought region. Look for SR/TL/Div as extra confirmation. I could wait for that bearish bar or price to be more exhausted for more confirmation and enter one candle later. But I had enough confirmations. PUT for 15m, win it.
- Its a bit tricky, here I used my 100% movement policy. Price moved only a little and VC went too much, almost close to where previous VC movement was. I did 15m trade after that hanging man. I could trade the same on the recent swing too where there is another hanging man and a nice VC divergence is waiting for me.
- Price going upward, making some Overbought messages, then suddenly pulled back a few bars but VC moved like crazy and almost became OS. 15m call.
They look like EMA bounce, and you could use EMA as a guideline too. You can use whatever EMA, I prefer 14EMA or 21 EMA. But they are not necessary.
Now, three important things:
- Money Management: You can use whatever money management, this won't effect the performance of this strat. If you can do it perfectly, you won't have problems with martingale/snowballing etc. I can get almost 70-80% ITMs, but that might not be your case. You can enter early, enter late, and get OTMs or miss trades thinking that it's not the right setup.
- "I got OTMs": Perhaps, Avoid high impact news, Session openings or Learn some basics about Fundamental trading, for example what would happen to price if UK is not a member of Europe anymore type questions are usually easy to understand.
- "You didn't mark/show the OTMs": Well, yes, I know there are OTMs and I didn't mark them. Because its vital that you understand how to get ITM first. I'll mark them when I have the time but I leave it to you guys to tell me whats wrong with my strategy .