Strategy: Harmonic Pattern Trading

Target profit: 75pips per week
Indicators: Channel Movement, Harmonic Patterns, RSI
Important chart pattern: double-top/bottom and Head & Shoulder, divergence and convergence
Important candlestick: Doji, bullish/bearish engulfing

My Trading Mantra

1. Objectively identify my edges - I have a system here that works.
2. Pre-define the risk of every trade.
3. Completely accept the risk. Consider the money GONE.
4. ACT on my edges without reservation or hesitation. Follow the rules and take every trade that meets the conditions.
5. Pay myself as the market makes money available. Take the profits and be happy. Even if compounding my account, pay myself something out of my profits each month.
6. Continually monitor my susceptibility for making errors.
7. Understand the absolute necessity of these principles, and therefore I never violate them.

Saturday, July 4, 2009

Trading Plan for 15mins timeframe 4 July 09

Establish Trend First
Go to Hourly chart to establish previous day’s direction/trend. Draw Fibonacci to establish key retracement / extension level

Indicators should align with Trend
Go to 15mins to ascertain if signals from various indicators are aligned and inline with direction/trend at Hourly chart to enter trade (Go see indicators set for 15mins timeframe)

Remember, indicators used must be able to show you momentum, strength and trend

Candlestick should align with Indicators
Signal from candle stick should align with the indicators and trend before entering trade.

Remember, key signals from candlestick are Hammer, Shooting Star, Engulfing and Doji (Go read up)


Ideal if chart pattern aligns
If the chart pattern is also aligned, it will be ideal for bigger profit target (Go read up)

Enter Trade?
If candle stick at alert is 8pips or more than 15pips, wait for retracement before entering trade

Go to 5mins to ascertain if it is indeed good before entering trade

Remember, avoid taking trade near resistance / support line

Stop Loss?
Stop Loss approximately 20 pips. If entry is right, should not go beyond 10pips OTM.

Exit Trade?
Target 10pips. If trend is strong at higher timeframe, expect profit to run more. Exit if near resistance / support line

Impact of news?
If there were news (impt ones), it might cause chaos to the market and trend might be disrupted momentarily. E.g. Oil and stocks for Euro and Gbp. Be wary of such news

Your trade results will show if you are doing what is correct or you are doing what you like
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