Presents the LiberatorFX Trading Series Dynamic Structure and Resistance

Transcription

1 Presents the LiberatorFX Trading Series Dynamic Structure and Resistance

2 Chapter 1 Introduction 1 EXPECTANCY Always determine the expectancy of any systems or strategies considered before committing actual capital by back testing and documenting at least 300 occurrences. The Formula: Average $ Winners * % Winners - Average $ Losers * % losers For Example: 100 *.70 = *.30 = 30 The Expectancy is 40 (70-30) which = 4000 per 100 signals (not including slippage and commissions) If it s a NEGATIVE EXPECTANCY it s a losing strategy. No amount of positive thinking will change that. The Distribution of wins/losses relates directly with your trading mind. You must prepare both mentally and financially for Size of and length of time of the inevitable Draw Downs SIZE MATTER S SIZE EQUALLS ACCOUNT FUNDING. You must be able to survive the size and duration of the drawdowns Estimated Drawdown Periods for day traders=several days, Swing traders = several weeks, Position traders= several months Back Testing is the only way to arrive at an average draw down Period for your strategy The Account Funding Formula: Minimum Required Margin * 2 plus maximum (back tested) Draw Down = Min. Starting balance 1

3 T2U: Trading Philosophy / Trading Psychology: I know to be true that: Successful trading is a learned skill and consistent profitability is achievable and repeatable The financial markets are 100% psychology driven, the tangible result of the collective emotions of all its participants. Success and failure are not measured by profits and losses: Success is achieved only by following the rules as laid out in this plan. To do otherwise is to damage the foundation of my trading mind and state. That my mental state is the major factor in my success as a trader and I accept as fact that my success is unlimited. Between Stimulus and Response lies our ability to choose Stephen Covey The Mind is Everything. What you think you become. The Buddha I do not have a bias as to where the markets may go. I react solely to the information as revealed on the charts, employing the chosen analytical tools as defined in this trading plan. Trading is my business and I am trading to achieve consistent profits and trading success. I define trading success as Total Financial Freedom. The ability to share with those I love the fruits of my labor and to always Pay it forward. I will forever continue to invest in myself.

4 1 Golden Trading Rules Check that ATM s are active in Ninja Trader before entering the market. Maintain discipline by trading the plan and following the ROE. Identify, predict, decide and execute. Have account number and brokers name and telephone number readily accessible in case of emergency. For example: a loss of ISP occurs then immediately call my broker and flatten all open positions and resting orders, then confirm that you are all flat before working on the technical issues. Remember the answer to stress is the breathing technique 4, 5, 6 Enter every trade in my trading journal as well as thoughts and emotions *** R OE *** Money Management, Risk Reward I will use a smoothed ratio money management system Risk will be a 1 to 1 risk/reward ratio Stop trading immediately if account reaches 120 % of maximum drawdown. Then Reevaluate Daily Routine Reload all chart data and preform a premarket analysis at 06:30-07:00 CST News Events I will wait 5 minutes after the release of a trading a High Impact News event before entering a trade Trading session (New York Morning) Monday-Friday 07:00 10:30p CST 1

5 2 Instruments Traded: EURUSD / EURJPY / GBPUSD / USDCHF /USDAUD / USDNZD / USDCAD / GBPNZD Strength of Signal DSR Level SOS1 Trend Change (TC)..SOS2 RSI Extreme.SOS3 Color Rotation.SOS4 Retests: Double Tops/Bottoms SOS5 Market Entries ENTRY: AGGRESSIVE entry signals will trade ½ UNIT on the left side with TC / LS1 / LS2 with confirmation RSI Extreme and Color Rotation CONSERVITIVE entry signals will trade ½ UNIT on the right side (double top/bottom) with RSI Divergence ISL DSR Level +/- 10 PIPS Target1 Value of the stop [EquiDistant] IF STOP is 22 pips THEN target is 22 pips Target2 2 times the stop *** Trail using VolBands ***Opposing DSR Level Further Clarification: If price trades in a DSR level (candle must touch or penetrate the DSR level) THEN look for a trend reversal signal TC and LS cluster [LS CLUSTERS occur within 3 bars of each other a may signal swing H/L] THEN after Color Rotation higher close, Extreme RSI (level must reach the 80/20) THEN enter next bar market. This is aggressive so trade ½ normal positions. The conservative entry waits for the pullback double top, higher close and color rotation with RSI divergence. If already taken a position then enter balance of normal position. If no position is on then enter full position size after TC Add-on and JET (Join Existing Trend) Entries If price makes a new structure High/Low THEN the TC LS1 LS2 indicators print THEN a color rotation THEN enter next bar at market 2

6 3 Further Clarification: Participate at point # 2 with TC indicator (the retracement from the impulse leg) and# 4 with TC indicator (the retracement of the 2 nd leg) in both bull and bear continuation moves. Figure 1: LS Cluster, 9X7 double top high with bearish divergence. SOS 5 short entry (DSR not shown). Add-on Scalper at points 2 and 4. If just coming to the markets at points either 2 and or 4. Enter with a JET (Join Existing Trend) to participate. 3

7 4 Initial Stop Loss and Targets If current position is +1 THEN If current position is +2 THEN Vol. Bands -5 THEN <OR> ISL is the DSR Levels -10 THEN the profit Target is Equal to stop TGT 1 is Equal to stop, TGT2 is loss risk next DSR level in the trade direction If Tgt1 has been achieved THEN CANCEL/REPLCE STOPS and trail on Vol. Bands +/- 5 pips Trade Management Position Size will be 2 Units Each UNIT consists of 2 contracts Aggressive Entries will be of 1 Unit (½ position size) Conservative Entries will consist of either the 2 nd half of initial entry or be 2 Unit s in size No more than 2 units will be traded on any single instrument at any one time Unit 1: Unit 2: Scalper Trader 4

8 5 A Visual Definition of Terms: 5

9 6 Rules of Engagement - Entry points SOS1 SOS2 SOS3 SOS4 SOS5 LS1 / LS2 / TC signal RSI [7] Extreme Level Price AT DSR Support / Resistance Aggressive entry Buy / Sell at the H/L of the DSR band Conservative entry [Wait for Color Rotation B/S] LS1/LS2 Sell Signal with RSI Extreme: Left Side [setup side] AGG ½ UNIT IF market moves INTO DSR Level and issues LS1 signal THEN??? Wait for LS2 Signal? Wait for LS2 AND Color Rotation? 6

10 7 LS1/LS2 Sell Signal with RSI Extreme: Left Side [setup side] AGG ½ UNIT Followed by the RETEST Double Top with RSI Divergence and a Color Rotation [CR Sell Signal] 7