I decided to combine a teaching and trading idea. As we see from the story, after detecting the 1-2-3 pattern, Ross hook worked twice in a row. Perhaps it will work out again, or at least partially move, provided that the line of the local uptrend is not broken. I marked the area for observation on the graph.
It is also very important to observe the volume if the line of an uptrend is broken without a significant - a high probability of a false breakdown. As for me, there is a high probability of her breaking through. If the price breaks the uptrend line on the seller’s and consolidates below it, a good entry point to the short one.
But if we assume that the price cannot break the line of the upward local trend and the upward movement continues, then we are at point 3 of the entrance using the Ross hook trading method. Maximum potential + 22%. I will describe this trading method in more detail in the next part of this article.
Joe Ross claims that you can successfully deal with market chaos on the basis of simple patterns that are inherent in the market and will always manifest themselves, regardless of how many bidders will know about them.
Ross hooks are a pattern so named for its resemblance to a climber’s equipment. Initially, Ross used his strategy in commodity markets, and when the era of electronic trading began, Ross Hooks, with some improvements, appeared in the arsenal of trading strategies in other markets.
The so-called 1-2-3 pattern, according to the writings of Joe Ross, is a reversal formation, that is, it determines the point of a trend fracture.
Ross Hooks strategies apply only if there is a trend. With lateral movement (flat) they can not be used!
Tracking shape is easy to track. With a trend movement, internal fluctuations occur, forming local minima and maxima, each of which is lower than the previous ones.
In the case of the version of the 1-2-3 pattern, after the formation of the next minimum in the conditions of a downtrend (it becomes point 1), a new maximum is formed above the point of the previous one, that is, there is a trend violation - this is point 2.
Point 3 becomes the next minimum if it is formed above point 1 - in this case, the formation is considered completed and becomes the first evidence of a trend fracture.
The formation is formed in the opposite way - after the formation of maximum-1 on an uptrend, a new minimum-2 is obtained below the past extremum, breaking the trend. After that, the next maximum-3 is formed at a level below the previous one. This formation, whether or , is considered an indicator of a possible change in trend.
Ross hooks. Efficiency is simplicity.
The formation of a 1-2-3 pattern is considered the first stage in Joe Ross's trading strategy. After it begins the second stage - the formation of the Ross hooks themselves. They represent new extremes on the emerging trend.
Subsequently, after the first, several more hooks are often formed, as in the example on the BTC / USD pair, which are nothing more than a series of successively updated extrema on the new trend. Each such figure can be considered a new entry point for position gain. But be sure to follow the trend itself and its strength.
Ross hook Trading - Features and Rules:
1) A characteristic feature of the Ross Hook is the impossibility of a ( ) trend to reach the next peak price value, followed by a correction.
2) To apply this strategy, it is enough to have at hand the standard set of MT4 or Tradingview tools (any other trading terminal is also suitable).
3) The strategy is applicable only on trend movements (Ross Hooks appear in the initial stage of the trend).
4) To see Ross Hooks on a bull trend, you need to identify the previous (and vice versa).
5) The recommended ratio of stop loss and take profit is 1: 2 or 1: 3 (fixed).
6) You can open positions after closing the 3rd sliding candle.
7) Additional signals - , moving average, , etc.
8) Using the Ross Hook indicator, you can simplify the task of finding the necessary graphical models. If there is no indicator, you can use the usual .
TARGET for working with the Ross hooks formation.
The goals for the development of the Ross hooks formation in the Bull and Bear Market. The goal sets the distance from the level of point 1 to the level of point 2, pending from the level of point 3.
Stop Loss is set lower / higher depending on the trend of the bull / level of point 3. Cured Stop Loss is set based on the of the trading instrument.
It is worth noting that this is the minimum goal. If the price goes in your direction, you can stay in the position, but do not forget greed - it creates poverty. In this option, be sure to move Stop Loss as the price rises, but take into account the of the trading instrument.
Tips for traders from Joe Ross.
There are recommendations given by Joe Ross aimed at successfully putting his strategy into practice. By following them, traders can avoid common mistakes and increase the profitability of their trading.
Joe's recommendations should be heeded - despite his venerable age, he still continues to actively and successfully trade on exchanges, combining this work with teaching.
The decision to enter the market:
1) You do not have to wait for the price of a losing trade to turn around in the direction you need. No need to incur losses to prove their case. Moreover, one should not increase the unprofitable position. The best solution would be to exit the position and accept your own losses, as they are inevitable in stock trading;
2) Before opening a position, you need to determine the levels of stop loss and profit based on the market situation, and not based on the size of your personal deposit. If the stop to be set according to the strategic calculation is too large for the trader’s account, you should forget about opening a deal;
3) The decision to exit the market should be based solely on changing market circumstances.
The market has its own character:
1) Do not enter the market during periods of excessively high - the pursuit of large profits does not always end as a trader would like.
2) Not all bear market strategies are ;
3) For each type of market (growth, decline, flat) you need to have your own "trading menu";
4) A canceled buy signal may be a sell signal (and vice versa);
5) It is always easier to lose money during trading than to make money.
About the impact of news:
1) Today’s news is best viewed tomorrow. The news becomes irrelevant and does not interfere with focusing on your trading plan.
2) If the reaction to the news from the market was not instantaneous, perhaps it will follow in the future and will have a more serious scale;
3) If the market did not respond to the news instantly, then it can be important.
1) To increase the likelihood of a successful transaction, it is necessary to enter it with a little delay, and exit without waiting for the change in profitable movement;
2) When the crowd enters the deal in full force - it is time to leave it.
How to accompany the deal.
1) Trade must be constantly monitored. There should always be a plan B, in case of a decrease in balance;
2) Do not confuse confidence with self-confidence. If you have a feeling of anxiety, you just need to close your positions, and after a while you can continue trading with a cold head;
3) Success is not a single transaction, but a successful series;
4) The best way to stop trading at a loss is to take a break and rest. The signal may be three transactions with losses;
5) If a series of losing trades is delayed, it is worth taking a break. This will allow you to collect your thoughts and, possibly, turn the tide.
The conclusion on this strategy is to trade Ross hooks.
Ross hooks are not just a pattern - this is a full-fledged authoring strategy from a well-known trader based on the use of when trading in a trend.
In fact, the hooks themselves are a series of successive local extremes that are characteristic of a trend price movement.
It is important to remember that this system does not work with lateral movement, which is why for its use it is important to be able to qualitatively determine trends and the prerequisites for their change.
Breakthrough of the uptrend line. Change in trend movement.