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PHASE 1 Profit Accelerator Start with the ES 5 Minute Strategy rules and the Master the Market Cycle Guide and rules. Scan to the left of the Charts and look for the previous downward trending price action that shows evidence of lower highs (LH) and lower lows (LL). Once this price action comes to a complete halt and no longer forms lower highs (LH) and lower lows (LL) our new Market Cycle Phase 1 analysis begins Price action will bounce off the lows and attempt at least 2 times (2X) or more to go lower and fail. Lower Boundary (LB) Identify at least two (2) Swing Pivots (SP) where price action finds lower support and reverses back upwards. Note that the 2 Swing Pivots (SP) may not be level and at the same price points. Create an envelope of the lower price boundary. Now that price action has stopped the down trend look for Upper Boundary (UB) Price action will now try to consolidate with big retracements off the lows and establish and build some momentum upwards. Identify the two (LB) Swing Pivots (SP) and identify the highest (SP) in-between them. (Neckline). Identify the last (SP) in the prior downward move with LH and LL before the first (LB) Swing Pivot. Establish and identify the highest price action between the lowest (SP) high in the prior downward move and the (SP) in-between the two (UB) Swing Pivots (SP) where price action finds lower support and reverses back upwards. By combining the Upper (UB) & Lower (LB) Boundary we create the concentrated area of the Market Cycle refer to as Phase 1. Profit Accelerator #1 Once price action forms a 2X bottom and lower boundary of the Market Cycle Phase 1 (i.e., W-pattern) we begin Using 3-minute chart analysis for early setups (including 2/3 bar reversal patterns) and entries based on same ES 5 Minute Strategies Increase position-size to maximum 2 ½ X (see position size notes) And then after the next 2 minutes of price action (1 st complete), that is the 5-minute bar. We promote the trade to the traditional 5 minute charts. Continue using normal ES 5 Minute Risk & Money Management Rules (Stops) Continue to have targets of 2+ points and profits should have increased significantly
PHASE 2 Profit Accelerator Continuing to use the ES 5 Minute Strategy rules and the Master the Market Cycle Guide and rules. Once this price action breaks above the Neckline from the Phase 1 price action, we look for Confirmation that price action is about to begin building momentum. Confirmation occurs when price action forms a new high above the neckline and retraces backwards but also establishes a higher low (SP) above the last (LB) Swing Pivot (SP). This new higher low (SP) creates a series of at least 2 higher or equal lows (HL) and we can begin looking for the 2 nd higher high (HH) creating an uptrend. our new Market Cycle Phase 2 analysis begins Price action will create momentum moves upwards with new higher Swing Pivots (SP) highs and retracements that lead to new higher Swing Pivot (SP) lows. Each retracement can often be referred to as a Flag Pattern or a variation of a Flag Pattern (Wedge, Pennant, Broadening Patterns, etc.) Fibonacci Retracement measurements can be made to evaluate the strength of the pullbacks. (Similar to Elliott Wave Analysis) Typically, 4 simple measurements are all you need 0%, 38%, 50% and 62%. We define the range of retracements between 38% - 62% as the HOT ZONE. Note that there are times in a Phase 2 trends where price action will consolidate sideways in the upper portion of the prior move (this is still a Flag Pattern and not to confuse with Phase 1 s or 3 s). Profit Accelerator #2 Once price action starts forming higher swing pivot highs and higher swing pivot lows (i.e., Flag Patterns) in the Market Cycle Phase 2 then Using 3-minute chart analysis for early setups and entries based on same ES 5 Minute Strategies Increase position-size to 5X (see position size notes) After 2 consecutive flag patterns, reduce position size to maximum 2X or smaller And then after the next 2 minutes of price action (1 st complete), that is the 5-minute bar. We promote the trade to the traditional 5 minute charts. Place Stops under the Opening Bell and pursue staying-in-winning-trades-longer (i.e., Starbucks trades) Continue to have targets of 2+ points.
PHASE 3 Profit Accelerator Continuing to use the ES 5 Minute Strategy rules and the Master the Market Cycle Guide and rules. Once price action has reached a level of upper resistance and comes to a complete halt and no longer forms higher highs (HH) and higher lows (HL) our previous Market Cycle Phase 2 analysis is complete and Phase 3 begins. Price action will bounce off the highs and attempt at least 2 times (2X) or more to go higher and fail. Upper Boundary (UB) Identify at least two (2) Swing Pivots (SP) where price action finds upper resistance and reverses back downward. Note that the 2 Swing Pivots (SP) may not be level and at the same price points. Create an envelope of the upper price boundary. Now that price action has stopped the uptrend, look for Lower Boundary (LB - Neckline) Price action will now try to consolidate with big retracements and establish and build some momentum downward. Identify the two (UB) Swing Pivots (SP) and identify the lowest (SP) in-between them. Identify the last (SP) in the Phase 2 Uptrend before the first (UB) Swing Pivot. Establish and identify the lowest price action between the highest (SP) low in the Phase 2 and the (SP) in-between the two (UB) Swing Pivots (SP) where price action finds upper resistance and reverses back downward. Note that the 2 pivots (SP) may not be level and at the same price points. Create an envelope of the lower price boundary (Neckline). By combining the Upper (UB) & Lower (LB) Boundary we create the concentrated area of the Market Cycle refer to as Phase 3. Profit Accelerator #3 Once price action breaks the prior Swing Pivot Lows and starts consolidating in the Market Cycle Phase 3, reduce all trade setups and begin Using only 5-minute chart analysis for early setups & entries based on ES 5 Minute Strategies Reduce position-size back down to minimum 1X (see position size notes) Stop Using 3-Minute Chart Analysis & begin re-using price action setups based on complete 5- minute bars. Do not promote any trades to any other timeframes. Continue using normal ES 5 Minute Risk & Money Management Rules (Stops) Continue to have targets of 2+ points.
PHASE 4 Profit Accelerator Continuing to use the ES 5 Minute Strategy rules and the Master the Market Cycle Guide and rules. Once price action breaks below the Neckline from the Phase 3 price action, we look for Confirmation that price action is about to begin building momentum. Confirmation occurs when price action forms a new low (SP) below the neckline and retraces upwards but also establishes a lower (SP) high lower than the last (UB) Swing Pivot (SP). This new lower high (SP) creates a series of at least 2 lower or equal highs (LH) and we can begin looking for the 2 nd lower low (LL) creating a down trend. our new Market Cycle Phase 4 analysis begins Price action will create momentum moves downwards with new lower Swing Pivots (SP) lows and pullbacks (i.e., retracements) that lead to new lower Swing Pivot (SP) highs. Each pullback/retracement can often be referred to as a Flag Pattern or a variation of a Flag Pattern (Wedge, Pennant, Broadening Patterns, etc.) Fibonacci Retracement measurements can be made to evaluate the strength of the pullbacks. (Similar to Elliott Wave Analysis) Again, 4 simple measurements are all you need 0%, 38%, 50% and 62% and define the range of retracements between 38% - 62% as the HOT ZONE. Note that there are times in a Phase 4 trends where price action will consolidate sideways in the lower portion of the prior move (this is still a Flag Pattern and not to confuse with Phase 1 s or 3 s). ATTENTION: Phase 4 Price Action can be very aggressive and typically moves faster than Phase 2 price action. Often the aggressive nature of price action may not lead to very many pullbacks if any. Profit Accelerator #4 Once price action breaks the neckline of the prior Market Cycle Phase 3 and starts forming lower Swing Pivot Highs (i.e., lower than the 2X Tops), start being aggressive with all trade setups and begin Using the 3-minute chart analysis for early setups and entries based on same ES 5 Minute Strategies Increase position-size to 5X (see position size notes) After two consecutive flag patterns, reduce position size to maximum 2X or smaller And then after the next 2 minutes of price action (1 st complete) 5-minute bar. We promote the trade to the traditional 5 minute charts. Place Stops above the Opening Bell and pursue staying-in-winning-trades-longer (i.e., Starbucks trades) Continue to have targets of 2+ points and profits should have increased significantly.
Price action form a W pattern on 6-30 and then begins forming higher SP lows. Once price action breaks the upper boundary of the W pattern. we can start applying the Profit Accelerator rules. Each flag pattern immediately after the W pattern can have the Profit Accelerator rules applied to it! Price action form a M pattern approximately a day later, and lower SP highs. The next day at the Opening bell, price action breaks the neckline of the M pattern. With the lower boundary of the M pattern broken and lower SP highs we can start applying the Profit Accelerator rules. In Market Cycle Phase 4 price action, often you will not get nice healthy pullback/retracements. So in those cases, we can carefully apply the Profit Accelerator bar-by-bar.
In this example, we have a complete Mini Market Cycle which initially gives us a W pattern (notice it is crossing over the next day s opening bell). Then we see that Price action forms a higher SP low which allows us to start identifying the flag patterns and applying the Profit Accelerator. The next day we see a continuation of the mini Market Cycle and price action then finds an upper boundary and M pattern that cares over into the late day session. Price action then forms a lower SP High and breaks the neckline shortly after the opening bell and again we can start applying the Profit Accelerator rules.
Position Size Notes The strategic objective of using multiple positions sizes is the following: to focus on creating a direct correlation between when price action is trending and increasing our profits with bigger positions sizes. By using the Market Cycle Guide and rules we can leverage price action conditions to identify trending versus non-trending. By leveraging the ES 5 Minute Complete Strategy, we can continue to have a high winning-to-losing trades ratio and simultaneously increase our dollars per winning trade with simple adjustments. When price action is in mini Market Cycle Phase 1, it may take some time before we see enough momentum to push price action above the upper boundary in order to transition to trending conditions. Hence, we should probe our trades with a slightly bigger position size until we gain enough exposure and experience with how the market continue to repeat the same price action moves. Once price action is clearly in a mini Market Cycle Phase 2, we want to maximize the momentum with as much position size we can tolerate from an acceptable risk level. When price action is in a mini Market Cycle Phase 3, we want to minimize the chances of being on the wrong side of price action continuing to move higher (i.e., short-squeezes) by reducing our position size to eliminate big losses. Finally, when price action regains its strong momentum but in a downward manner, mini Market Cycle Phase 4, we again want to maximize our profits with the trending price action.
Once you become very effective at identifying the Phase 1 (W-pattern) and the neckline break, you can use a bar-by-bar scale-in approach an increase your position size as much as 10X. Similar for Phase 3 (Mpatterns). Example #1: Building a bullish position in Mini Market Cycle Phase 2 using a scale-in approach 1 st bullish bar enter 5 contracts, 2 nd bullish bar enter 3 contracts and 3 rd bullish bar enter 2 contract Total of 10 contracts Example #2: Building a bearish position in Mini Market Cycle Phase 4 using an aggressive scale-in approach 1 st bearish bar enter 10 contracts, 2 nd bearish bar enter 5 contracts and 3 rd bearish bar enter 1 contract Total of 16 contracts Use a simple calculation of your trading capital to determine maximum position size for scaling in to positions. Never risk more than 40% -50% on any trade setup! Note: More risk taken with bigger position sizes in Mini Market Cycle Phase 2 s and 4 s in order to maximize the rewards opportunities with the momentum in price action.
If price action is clearly in the beginning of a Phase 2 or 4 and the ES 5 Minute Complete Strategy gives you a setup, you can place stop at low of day/high of day respectively and try and capture entire day momentum.