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Although the principles described are based on what is generally accepted as good trading practice, you must make the decision
as to which of these are right for you to incorporate into your trading plan and articulate these in a way that is using your own
words.
Any trading system developed by any trader should be tested using a simulated or ‘demo’ account and appropriate measures put
in place to ascertain whether the results merit consideration for trading in the live market.
Trading goal:
Short- and Long-term purpose for trading is:
b. Adhere to all aspects trading execution plan including pre-planning entry and exit systems.
c. I aim to maintain an account margin level of at least 20%.
d. I will position size with a tolerable risk level on any single trade of no more than 1-2% of my account balance prior to entering
any trade. This is based on risk to reward of the trade using technical analysis.
e. I will have no more than 4 positions open at any time and no more than 2 trades with identical currencies within the pairing.
f. I will journal trades including the entry and exit strategies planned, the P/L outcome and how well or otherwise I adhered to
my trading plan.
g. My first task of any trading session is to check economic data releases that may impact on any open or potential position
entries and have within my plan guidance on trade management.
h. If I am not able to watch the market, I will always have a stop placed on the platform.
Trade choices:
1. The currency pairs I will focus on trading are:
All Major and Minors Forex pairs
2. Primary timeframe(s):
1Min ,5 Min and 15min Entry on 4-hour Divergence
15Min and 30 Min Entry on 1Day or Weekly Divergence
3. Primary exit timeframe
5Min exit based on Fib tool on previous swing hi or swing Low point and never a longer timeframe. This is covered in more detail
within the exit strategies of this document.
Strategy outline:
Entry Overview:
a. Timeframes: 1/5/15 min on 4Hr Div, 15/30 min Entry on 1Day and weekly Div.
b. Blue and Orange momentum lines exit ATR bands and lead the price action.
c. Price action exit the ATR bands and re-enter ATR bands- first pull back (Blue and orange lines lead as price pulls back to steps).
d. Price over 200MA for Long Trades Or price below 200MA for short entries on Daily time frame.
e. No medium/high impact economic announcements within the last 30mins.
f. Delay entry if there is a key price point (resistance if going long, support if going short) within 20 pips of proposed entry price.
If subsequently there is a breakthrough on bar/candle close of that key price point, the position may be then entered.
g. Appropriate position sizing planned prior to any trade entry to within pre-defined tolerable limit.
Auction Zone
Vacuum gap waiting to be filled
1.Accumulation Phase
4.Trend Continuation
3.Pre-Tension Build up
Market Levels
Within a trend you have the following levels as the level progresses your rate of success reduces. Once you have understood the
market context and direction only then can you gain confidence within the market.
With STME we plan to capture Level 1 and 2, personal preference is to capture level 1 impulsive move out of the accumulation
zone this is key for our confirmation of price direction. Level 2 is the next move of the distribution phase and is the bigger move. I
prefer entering in at level 1 exiting half my position size at level 2 and hold the remining position within the duration of level 2
phase.
Level 1
Accumulation Zone
Stop hunt?
In an Uptrend you buy the Bullish signals with the breakouts or invalidation of bearish signals and you take profit to secure trades,
the revers happens on down trends. To identify the context, view the daily time frame and apply a 200MA as shown below. Price
action above this is considered an upwards trend and buy signals should be taken if they conform to all rules of STME this will be
discussed in later chapters and vice versa on downward trends.
Daily Chart
200MA
Support line
For more information on the different trend line trade information and patterns view the sections related below.
Channel Trends
The following image shows the result of the trade and the entry and exit points. Entry will be discussed in the following chapter.
The technique used in this entry was two separate lot size entry’s equal too each other. 50% of the position was taken at 1R the
remaining 50% out at 2R while moving the stop loss to the entry position securing you from any losses.
Trendline Break
Real alert Price Pull Back
Momentum Breakout
Profit target 2R
Alert System
Select L for Long Div Alert on the 5Min 15 min and 30min time frame.
Select S for Short Div Alert on the 5Min 15 min and 30min time frame.
The below image shows potential entries. STME with Bullish Divergence on the 4H chart, Price making lower lows and the MacD
indicator printing higher lows then you can start looking for the first entry with STME on the M5/M15/M30 time frames.
Price
MACD
Invalid Divergence
Another live divergence trade that has been invalidated, invalidated divergences can occur more often than we think. This example
indicates a situation in the market we should always be prepared for. It’s essential that we validate a trade entry using our technical
analysis to avoid losses. Having said this, this set up has potential, so I held onto this pair and waited for further validation at the
support zone for possible buy entries. Divergence continues to build over time a good buy opportunity may arise in the areas
marked in fill zone below at this stage I consider setting in a buy limit order.
Failed divergence
Fill Zone
Rising Wedge
Accumulation Zone
Trend Continuation
3# Entry on Pullback
Blue + Orange line leads price action
even during pull back
1# Momentum + Break out
Price + Blue Line Moving Together
Signals are never 100% reliable always limit your risk on buy / sell signals by waiting for confirmation.
The below image shows other possible options indicating perfect momentum pre-tension set ups Orange line starts to lead during
the price pull back phase. screenshots below show perfect examples of pre-tension in both directions (long and short). Blue and
orange lines indicate explosive moves with the possibility for another explosive move in the same direction after re accumulation
phase.
Stop Loss
Previous Swing Hi Point
Profit targets
For a higher winning percentage take a relatively small target such as 1R or 2R. For greater rewards come lower wining ratios
target 3R and above using technical landmarks within the chart.
Entry 1 Entry 2
b. Holding positions over the weekend or overnight hold risk, especially with key economic data points approaching.
c. I will close any open positions prior to the following economic announcements:
- Non-farm payrolls (US)
- Interest rate decisions with any relevant currency pairing.
Divergence patterns below, a bearish divergence on the 4H chart and price makes a higher high along with the MacD making a
lower high. Set alerts on the lower time frames for entries on the 5 min / 10 min and 15min charts.
Bearish Tend
Channel Patterns
Chart patterns are a great addition to STME, below are some examples of channel trades and can also be implemented with many
other chart patterns. The 2 main channels I trade with STME are channel down and channel up the most important areas I look
for in confirming these channels are uniformity of price action within the channel and uniform price action.
Exit
Entry 1Min
Entry 1Min
Exit