Today, we will take a look at LYB. We can see the price has been moving inside a correction for the last 195 days, and the structure is clear enough to understand its more external limits.
The way I thought this scenario was like this. How many times in the past were similar situations like the current one, and the next question is can I observe a pattern so I can trade?
The answer is: This has happened several times in the past, and yes, there is a clear pattern that I can wait for. Let me show you:
The explanation here is: First we need a big structure (which we already have), then we want to see a breakout followed by a 15 days correction) IF that happens, we want to see the first breakout of that followed by a candlestick below that breakout movement, and at that moment, we set bullish pending orders on the new local high with the stop loss on the previous low. The expected risk to reward ratio on this is 2.5, and based on the previous examples, we had 2 profits and 1 break-even.
What happens if the filter is never fulfilled?: We don't trade ;)
What happens if the filter is fulfilled, your setup is executed, and then the price goes directly to the stop loss:? I lose 3% of my trading capital, and I keep executing as emotionless as possible :D
It's important to show that by doing this, I can eliminate all the emotions from this execution, and by doing that, I can follow my plan without changing things on my strategy. One of the main reasons people are not able to achieve consistency is not because they don't have a good system but because they are not able to follow it (trading psychology)
Thanks for reading! Feel free to share your view and thoughts in the comments.
The way I thought this scenario was like this. How many times in the past were similar situations like the current one, and the next question is can I observe a pattern so I can trade?
The answer is: This has happened several times in the past, and yes, there is a clear pattern that I can wait for. Let me show you:
The explanation here is: First we need a big structure (which we already have), then we want to see a breakout followed by a 15 days correction) IF that happens, we want to see the first breakout of that followed by a candlestick below that breakout movement, and at that moment, we set bullish pending orders on the new local high with the stop loss on the previous low. The expected risk to reward ratio on this is 2.5, and based on the previous examples, we had 2 profits and 1 break-even.
What happens if the filter is never fulfilled?: We don't trade ;)
What happens if the filter is fulfilled, your setup is executed, and then the price goes directly to the stop loss:? I lose 3% of my trading capital, and I keep executing as emotionless as possible :D
It's important to show that by doing this, I can eliminate all the emotions from this execution, and by doing that, I can follow my plan without changing things on my strategy. One of the main reasons people are not able to achieve consistency is not because they don't have a good system but because they are not able to follow it (trading psychology)
Thanks for reading! Feel free to share your view and thoughts in the comments.