Rules: · Must be in trending market. · 34EMA bounce/kiss must be within 2 ticks (0.5 points). · Enter trade @ close of bar in direction of trade · Set-up bar must close above (long) or below (short) of 8 EMA · 34 EMA, 89 EMA, & 200 EMA must be of correct stacking, BUT o if one EMA is out of place, check for Stochastic slingshot formation. · No trade on FLAT 34 EMA · Rule of 3 Waves: No more three trade entries within a trend · NO trading near Pivots. Use as targets if feasible (6 ticks away or greater)
Most good trending markets have small pullbacks or retracements before resuming their overall trend. By identifying and properly entering the markets on these pullbacks, you can often ride a strong move while keeping your risk very small. The Trendsetter is a high probability trading strategy as we are trading with the trend and using the 34 exponential moving average (EMA) which universally is used by thousands of traders globally and in my opinion becomes a self-fulfilling prophecy. This strategy is purely mechanical and eliminates any subjectivity or discretion in taking valid setups. Trades are only taken with the trend and these are only taken when the 34 EMA is trending. This means that as long as the EMA is not flat, trades can be taken. To assist with confirming the trend direction we use the Commodity Channel Index (CCI) with a setting of 50. Using a length of 50 on the CCI provides an extremely simple and objective method of trend detection. As long as the CCI remains above the zero line and painted green, the trader should only consider long trades. As long as the CCI remains below the zero line and painted red, the trader should only consider short trades. The 34B strategy works on all time frames and all markets provided we have a trending market. Indicators used: 89 exponential moving average (89 EMA). 34 exponential moving average (34 EMA). 8 exponential moving average (8 EMA). Commodity Channel Index (CCI) with a setting of 50. Rules. Entries are always in the direction of the trending 34 EMA. The candle or price bar must close in the direction of our trade to confirm the trade entry. The 8 EMA must be above the 34 EMA for a long trade to be considered and the 8 EMA to be below the 34 EMA for a short trade to be considered. Price must pullback or retrace and touch the trending 34 EMA and we execute/enter the trade on price closing back in the direction of the original 34 EMA trend direction. When the 50 CCI is above the 0 line consider long trades only. When the CCI is below the 0 line consider short trades only. An extra rule I like to use in slower markets to assist in confirming the trend has resumed is what I call the rule of two. (RO2). Two full bodied candles-bars both closing in the original trend direction confirming that I have momentum. Stops. Place your stop 1 to 2 tick below the closest swing low for long trades or above the closest swing high for short trades. Targets. As a minimum your profit target should be a minimum of 1 to 1 with that being said the earlier you enter a trade in a new trend the great the profit potential. I recommend that you exercise caution in taking any more than 3 x 34B trades in a trend. On a regular basis you will have 5 to 6 34B in a trend, if you choose to take more than 3 trades in a trend be ready to tighten your stop or exit the trade. Conclusion. The 34B is an excellent high probability trading strategy that once mastered and traded correctly you could successful day trade for life just with this one trend following strategy.
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