SPANISH89 TRADING- A low risk~high reward~high probability stratergy for newbies

Discussion in 'Professional Trading' started by spanish89, Feb 5, 2009.

  1. Aloha everyone.

    I know quite alot of people have viewed my daily trading journal ove the last few months,
    and we have builtup a few regulars members for the little community there. :)

    There is alot of really great helpful content amongst the many hundreds of pages,
    however its sandwhiched and hidden amongst many many pages or name calling and bitchfighting and stuff! :p

    So ive decided to create this thread as a sub-thread, where i will 1st post a simple easy to use 'low risk~high reward~high probability stratergy',
    and then will post some of the best helpful content from the other thread that gives alot of tips that will help newbie traders. :) :cool:


    Spanish89 trading stratergy:

    The method is called ''Drop-Lock-Engage'', and it works in both range-bound markets, and in markets that are trending.

    1. You DROP your head down at all times to look at the chart.
    (So no looking out the window or at fit girls) lol

    2. When you see the market is spiking up very steeply and far 1direction you LOCK your eyes onto that line and follow it up with your eyes as it keeps going up.
    (Once you have locked-onto it then the market is in great danger and is trapped by you,
    since you now have it in your sight and are just waiting till its at its weakest before you attack it).

    3. When you see the market form that 1-2-3 formation that means that its over stretched itself too much,
    and this means that the market is now at its weakest point.
    (Ive attached a screenshot of the 1-2-3 formation, it means the head n shoulders chart pattern)

    And when you see that number 3 popup spike form you then ENGAGE the market by attacking it with your trade.


    You put your stoploss just above the 'number 2 middle spike'.

    (Often this will be the current high of the day so will have alot of stoplosses there that would cause a big breakout of they get taken out).

    And your target should be between 35ticks t 200ticks each trade.

    (Its basically a case of how tight a stoploss you want to use to trail it, and how many support levels your willing to hold it through and hope it breaks through before you want to just cash it in).

    Ive attached some screenshots to make it clear on how to spot a head n shoulders, and what sort of formation/movement you should watch for as a guide on when to cash in the trade.

    (They are of a whole range of different timeframes, as you have to use all timeframes when trading,
    and both on rangebound days and trend move market days).

    *The red circles are the times where to sell, purples where you hold till, and the green lines are where you have your stoploss set at.
  2. How to trade range bound days
  3. And bigger time frames after bigger moves.

    I will now post abit about using different timeframes, and hwo to workout the market direction.
  4. Even though everyone likes to avoid using the words 'predict' or 'forecast', all trading actually is is simply you thinking that the market will move in a certain direction in the immediate future, and so making a bet on that by making a trade in that direction.

    To be able to 'work-out what will happen next you need to-

    1. Look at what happend very recently on the 1 n 2mins chart to see exactly where the price is now in relation to the most recent move of over the past 1 to 15mins.

    2. Then look at where this current level after what the recent move was is leaving you in relation to the range for the previous week t 2weeks.

    3. You then scroll between the 3mins t 10mins charts to see how steep and sharp this recent movement actually has been on this day, and if its forming a head n shoulders/double top/slidng top/flag pole formation.

    4. And you then go back to the 1min once you know which direction to trade in and just use the 1min / tick-by-tick (1second) chart to time your entry to being pip-perfect.
  5. Some quick simple but very important and effective tips to keep in your mind when trading-

    *Patience pays by the hour.

    (The more patient you are the better entry you will get, the less potential loss you could have form your entry, and so the more money you will consistently make).

    *Never ever try 'trend-chaser' trading!

    Instead focus on letting the market move for abit in direction till it,
    often till it overdose itself completely for that direction,
    then wait till it forms the head n shoulders reversal formation,
    and then simply follow teh method and trade off the number 3 spike.

    This is the easiest, safest and yet most effective and profitable trade setup and formation out there.
    its very clear n easy to see when its formed, and you can make alot of money yet only have to risk very little.
  6. Brandonf

    Brandonf ET Sponsor

    I'm kind of confused by this chart. Yes I know how to trade range bound days, and I think your saying to do it the same way that I would..but your circles should be marked as to which is a buy, which is a sell. What's confusing me to me is that some of the circles, which I'm assuming represent a place to buy or sell, occur pretty much in the middle of the range- just about the most dangerous place to do anything as far as I can tell.

    Anyway good thread spanish and I hope it stays "clean".
  7. Brandonf

    Brandonf ET Sponsor

    I like that - I'm gonna have to borrow it from ya.

  8. Aloha mate, im glad you like the thread so far.

    The circles show where you would enter 'the trade'.
    (It could be either a buy or a sell. Since if its a head n shoulders up-right as in the screenshot you would sell,
    but if the formation forms upside down, which it often does and is called an 'inverse head n shoulders', you would then buy).
  9. And to help explain why i focus on trading reversal formations ive tried to explain it in an easy to understand way as possible,
    and have used an example to help-

    Someone gets a piece of paper, draws the bonnet of a car on it, and then says to you,
    ''Draw the rest of the car now, but if its not the same as how i drew the picture of the car i have in my pocket then you are going to lose your money''.

    You would have huge problems in doing that, but when trying to trade from mid market levels that is all basically what you are trying to do,
    look a flat horizontal screen and workout what comes on the other side of the page.

    However, if someone says to you ''Ok look at this screen, its a 3D picture of a car, but you facing it from head-on, so standing infront of the bonnet and looking down at the chart from that way, instead of side-on.
    The left half of the car has been drawn up to the left side of the roof of the car, and so all you now have to do is draw what you think will come on the right side of that''.

    Would be so so easy wouldn't it..

    Since the the right side would just mirror left side with exact symmetry.

    With the markets even though there isnt ''exact symmetry'' ever, in some cases it does come very close to that,
    and there is ALWAYS ''an opposite 'reaction' for every action''.
    May not be an exact equal size reaction, but there will ALWAYS be some kind of opposite reaction, EVERY SINGLE TIME.

    And so thats why its so so much easier to just take the to off and buy up the bottom of steep sharp moves since there is always an opposite reaction for every action,
    and as long as you stick to the 1-2-3 head n shoulders method for your entry your will repeatedly make trades that are risking very little, have the potential to make alot, and have a very high probability of being very likely to crash in your favour before hitting your stoploss.

    Thats why the 30mins and 1hour chart zoomed out comes in so handy, as you can see instantly just by looking when a spike looks too big and out of place on that, and so you then go to 1min chart and get your entry in.
  10. oraclewizard77

    oraclewizard77 Moderator

    So how do you tell if the market is range bound or trending?
    #10     Feb 5, 2009