the process that leads to a trade
first and foremost I am looking for a low risk entry spot-anything else is secondary
to avoid general risk, there is a fundamental trade selection for any object that makes it to the portfolio of instruments i will be trading
this is a lengthy process of an analysis that has over a hundred steps of qualifications to ensure a low risk of the instrument behaving in a risky manner to the short to mid term trader
the following is my last trade i made (not posted due to its liquidity= it is illegal to have a trade recommendation posted where the purchase of members could beneficial move the instrument in my trading favor and we have traders on PPT who trade size)
There is also a lengthy process in regards to inter market relationships and portfolio risk that I am skipping here but in short i have a larger position long in BTC, shorted BTC for insurance on the recent risk I pointed out:
and the following crypto trade was in alignment of this overall portfolio and insurance position I was in
In addition is was a fairly new candidate to the portfolio and i was strongly familiar with the personality of the trading vehicle to intensive back and forward testing i had just concluded a few months prior
In this frame work I will now walk through a few steps on how the trade came about
I quickly made a review of the project:
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reviewed basic stats
and made sure the instrument wasn't in the spotlight-I am always trying to trade averages no extremes to have a low probability of surprises or otherwise outside the norm risk probabilities
my process is always one of a "top down" approach to not trade against the main directional grain but t=rather have trend on my side
and the weekly chart supported a long exposure:
what sprung my attention when screening through the portfolio candidates was the abnormality that the traders in SUPER, an obviously not common trader group since SUPER isn't Nvidia, were trading a principle violation, in this case using sideways moving averages as a valid support resistance tool
= an edge for my beauty principle tool and as such a possible edge worthwhile exploring:
(prep for this trade was three days ago-so the candle highlighted to the right yellow circle hadn't printed yet-it was the resulting entry point after the prep but the left yellow circle indicated this pattern to possibly returning
a closer look after removing the 40SMA from the chart revealed a good angle degree how price moves against the 20SMA and gets strongly rejected
and the upcoming scenario warranted for a similar wide angle approach as well
again you have to imagine the last two green bars not being printed yet
with a basic edge present I examined for further unusual trade behavior that would exploits SUPER trading behavior and found the following
wave patterns in SUPER came in day counts of 5 and this count was just finished=ripe for a reversal
with BTC facing the threat of a down move as an inter market overlay but a weekend to do so=doing it in "bounce steps", I had the right alignment on what I was looking for
additional entry favoring edges were a ZLR on the CCI :
the dominant underlying setup structure on the daily time frame was a "V" formation that already had completed its sideways move and now was working on the V-dip
=entry zone
the next important part is to evaluate if there is a trade there based on the numbers so I evaluated carefully where the highest probability for a limit order entry would be and as such examined trading fractals of the past:
you can make out on the zoomed out view of the daily chart that an edge dominant valley on the VWAP (something classical TA trades exactly the opposite and ignores)
provided for a perfect supply zone
and when zooming in a more detailed view brought levels to light:
with an entry point cleared:
the examination for the financing target point was necessary next and i could identify a isolation fractal as i call it where most likely an iceberg was sitting prior-look closely to the right the spike on the VWAP:
visually that looked already promising, so I went now for the obvious max stop point to see if a prosper risk reward ratio would be in place for a possible play:
expecting a hammer and only interested in an action reaction play on trade price behavior I do not expect more than a percent of risk but for trade r/r evaluation i always check for max drawdown which was in this case at the red line
I always present risk/ reward prep visually since it strengthens psychology if it is an actual play selected which looked like this:
and of course also measure the probabilities in numbers:
max risk = 3.74%
14.21% financing
=3.8 r/r
this is a prime setup and as such I placed the limit order and it got filled
even if you miss measured your limit order entry and would have taken a bar take out on sixty minutes as an late entry and i measure the level of how high i am willing to go in, late, in case of trouble=i always have a backup plan and a clear instruction on when I bail
you would have been just fine
in this case your r/r visually represented would have been:
3.14 r/r
and your financing profits would have been
11.75%
once in the trade you typically need to sustain two swing legs before financing =do not follow any intuition or give way to pain but follow your trading plan established prior to execution
the price behavior was as expected with a nice immediate bounce leg within the first 3 hours and a nice second leg starting right at the open of the next session marked in the vertical blue dotted line
on a 15 minute time frame the "harmony" of price behavior is even more visually represented:
The financing target was hit as such as well and a 14.21% profit on half of the position was achieved
right now we are trading here: