Friday, May 20, 2011

The most swingable setups

Until your winning percentage is very high, you should trade only swingable setups in order to be profitable. If you can make +2 or +4 on an A2, that's an average of +3 and if you lose -2 when you are wrong, you still come ahead most of the time even if your success rate is 50%.

The most swingable setups are the following:

The 1st pullback of the day. Includes an inside trend bar right after the entry bar as in today. This is basically an L2 and when close to the ema acts like an A2 or 2 legged 1PB.

The first A2 of the day. When there is a trend move followed by a 2L pullback, this is very likely to be successful and give a move similar in size to the first leg.

The first A2 after a reversal. When the price broke above b12 and the ema at b26 and gave a 2 legged pullback, this is a high probability swing setup likely to give 4 points.

Any W1P or the first A2 after a W, fBO or any kind of key failure. W1Ps often retrace the entire wedge, so you can hold part of the trade for many points.

All of these are basically the first pullback in a new trend and the only requirement is there is sufficient room for the price to move. A sharp AM trend increases the chances of any of these trades succeeding. If you have more than one reason to take a setup, then you could exit at +2 and +4 rather than +1 and +4.

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