A trader's daily plan (part 15)
continuing from the previous post in this series we have two setups now talked about in detail:
fading HOD/LOD in the direction of the trend and the "V" formation
today we will be speaking about the CEOD (cheapest entry of the day) formation :
1.) Scan: evaluate weekly or daily trend - are we long/sideways/short 2.) Scan: evaluate pre market to determine a high probability of a daily condition:
a. Trend day (TD) b. directional c. sideways directional -fading HOD/LOD in the direction of the trend -"V"
-"CEOD" cheapest entry of the day
d. sideways e. sideways counter directional
the definition of this setup is fairly simple
but don't be fooled its hitrate and efficiency is not only based on a simple moving average s/r bounce as it might seem-there is multiple edges coming together but i have reduced its applicability in these fairly simple laymen terms-just back test this entry tool and you will find astounding results-it is ideally to be applied to the 5 min time frame and highly liquid instruments-it is easy to be executed since it requires a limit order and in combination with a quad exit highly profitable and most of all low risk with tight stops
the setup: for a long setup prices must be trading at least for 90 minutes below a 40 simple moving average to imply direction
(this trade is a counter directional trade)
than prices need to penetrate the 20 simple MA and ideally touch the 40 simple MA
priced now heading in their original direction again returning to the 20 simple MA find their entry exactly at the tough of the 20 simple MA
(so you set,and adjust throughout time if necessary,a limit order one tick above the price of the MA line)
for short setups all instructions in reverse
here are some examples
x=marks the spot of entry
20 simple MA is yellow
40 simple MA is turquoise
there are derivatives that are based on the same principle here are some examples:
here is an example of ES and NQ in a premarket environment
these examples are mainly to illustrate the extreme low risk entry point location the highest hitrate can be found on sideways days and an entry time in the doldrums
(charts are courtesy of TradeStation )
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