formulate a trade idea – your analysis, a likely possibility
catalyst – satisfy the conditions of the textbook set-up
TREND on entry timeframe & 4H chart (✓)
COIL structure, choppy relative to prior impulse (✓)
Flag // Rectangle // Pennant // Wedge // Triangle
Fibonacci 50%–61.8% // S&R Level // Trend Line // Moving Average
Simple // ABC // ABCDE // Extended Combo // Stochastic Wave Cycle
Entry @ Break of Structure // Area of Value // Mid-Range
Stop Loss @ +1ATR away from last wick // Before Impulse Start // Outside Range
Take Profit @ Length of Prior Impulse // Next Area of Value
1% capital risked for potentially xxR
Entry: xx | Stop loss: xx (points) | Take Profit: xx (points)
If running >1R + swing established, risk halved
If 20% left to take profit // set-up fully played out, shift to break even
If strong momentum + space to run + aligned with long term view, extend take profit and use trailing stop
RISK MANAGEMENT & RULES
All trades to be allocated risk of 1% X capital consistently.
Do not take additional risk on correlated pairs.
Maximum exposure at any time is 10% of capital – defining max drawdown.
In the event of a 20% realised loss or gain, 1% risk will be based on the new existing capital.
R:R ratio must be at least 1.5.
Trades should essentially be managed on the entry timeframe itself.
Due to the price discrepancy between brokers on TradingView and CMC Markets, key in the trade based on prices shown on the CMC chart.
The aim is to identify low volatility areas and enter before the high tension accumulated results in massive price movement.
You will be missing many moves. Doesn’t matter, there’s always another set-up. Do not chase the markets.
Do not care which currency is “strong” or “weak”, just trade with the trend and structure of markets.
Be happy to exit at take profit target.
You will be wicked out from time to time. It’s all part of trading.
Hindsight is a parasite. Ignore it and move on.
Ignore reversal trades. That’s not where your edge lies. Even if the analysis is correct, it will be too volatile and you’ll get wicked out. Search for the continuation after reversal.
Exits define your edge, do not only look for the premium entry. Look to plan out the whole process.
Not only about the risk to reward ratio, probability of winning also plays a huge part.
Remember, a high potential R performance means a lower probability of success.
The whole system with all the departments of a trade has to function in synchronisation.
Long run numbers: Targeting around 60% win rate with average win about 2R.
Be patient enough and trust your analysis.
Only trade when there’s an edge in your favour.
The edge will play out in the long-run and you want to make money in the long-run, over a series of trades.
Be a robot, live like you’re already dead.