Anek's Holy Grail v 1.0 or AHG for short. Good working strategy for Day trading, principles can be applied to most time periods and instruments. This strategy works in most trending markets. STEP 1 - DETERMINE THE TREND - (Up, down, sideways) Determine if there is a MEANINGFUL TREND present, (There are two types.) Positive Uptrend = higher highs, higher lows Downtrend = lower highs, lower lows The ones you should ignore (for now) because they require greater skill to consistently profit from or simply, the sideway ones: Congestion/Indecision = higher lows, lower highs (Symmetric Triangle formations) Consolidation = horizontal lows/highs (Further explanation in additional patterns section) As you gain more experience you can profit from; Consolidation by fading support/resistance Symmetric triangles (HL LH) because they tend to give birth to POWERFUL new trends For now stick to the meaningful trends. (Uptrend and Downtrend) Note: (HHâs and LLâs are defined by CLOSE, not wick for trend determination) STEP 2 - ONCE A TREND HAS BEEN DETERMINED HOW TO PLAY IT (entry) If a MEANINGFUL TREND (uptrend or downtrend) has been found we need a logical entry. UPTREND BUY on a pullback and be nimble with our target. Take advantage of minor WEAKNESS in a STRONG TREND to get a good fill. Target can be whatever you feel comfortable with, it is entirely up to you and only in time will you master this. A few examples as follows: 50% Fib retracement from the recent High to Low swing Stochastic crossing, few ticks below previous resistance Upper Bollinger band. measured move up You could trail the stop to ride those breakouts, all very discretionary. (Stop? Whatever would make it a lower low aka a CHANGE of trend) Uptrend channel: Two higher lows, two higher highs DOWNTREND (the evil twin) SELL (Short) on a pop up and again be nimble with our target. Take advantage of minor STRENTH in a WEAK TREND to get a good fill. Target can be whatever you feel comfortable with, it is entirely up to you and only in time will you master this. A few examples as follows: 50% Fib retracement from the recent Low to High swing Stochastic crosses when a trend has been determined with an opportunity to enter at low risk. few ticks below above previous support Lower Bollinger band. measured move down You could trail the stop to ride those breakdowns, all very discretionary. (Stop? Whatever would make it a higher high aka a CHANGE of trend.) Downtrend channel: Two lower highs and two lower lows When looking for entry, say a long or even re-entry, you want strength to return in the pullback and when that happens make sure price did not violate the current highs and lows. Never go against the trend. When the trend is strong buy a pullback. When the trend is weak short a pop up. The market can not be predicted consistently and consistency is what we want, so be smart about this. No exceptions!!! If STOPPED OUT, meaning, a CHANGE of a trend, stay ON THE SIDELINES until a NEW MEANINGFUL TREND is defined and we take our stop like responsible traders. REVERSALS are the enemy, they stop us out. Luckily, they are not very common which is exactly why this strategy works. Some days will be filled with them and sadly I don't know how to overcome this. On days like this, you will lose money. A lower low without a lower high is not the same as a lower low with a lower high.... and a higher low without a higher high is not an uptrend. CHANGE OF TREND Trend must go from a downtrend to an uptrend or vice versa. (2 HH's 2 HL's or 2 LL's 2LH's) The exception is if one of the two swings is a double bottom or a double top but the next swing must be a HH/HL or LL/LH. If nothing of that kind, then you stay out and let a clear trend develop. Trend line breaks are usually more aggressive when the last high was not a higher high, especially if it was a LOWER high. Never call a top, never call a bottom, it is IMPOSSIBLE to predict accurately on a consistent basis therefore the best approach is to examine what is happening NOW, attempt to profit from possible volatility and situate yourself in a strategic place, with patience and conviction. A bottom is never confirmed until you see higher lows *and* higher highs, with a subsequent low that is also a higher low hinting towards yet another new, higher high. PIVOTS Are both subjective and objective, that's where skill and experience comes into place. The pivots plotted by the software are quick areas of reference but not necessarily written in stone as they have fixed parameters that might work for some scenarios and not for others. STEP 3 - INDICATORS UPDATE: Official List of Allowed Indicators for AHG Support and Resistance visual aids (TRO indicators are excellent) www.kreslik.com tro dynamic sr.zip Trend lines, better if hand placed. Highs and Lows visual aids Volume based bars, tick based bars Paintbars to accentuate price action Candlesticks to find extra confirmations Market internals, optional (useless to me, maybe I don't how to use them) Zig Zag indicators to enhance patterns Fibonacci Retracement percentages 50% is the best kept secret in trading fib.illustration.1.jpg fib.illustration.2.jpg Typo on chart, loss = lost fib.illustration.3.jpg Horizontal Lines AHG E-motion (Dynamic Fib retracement) â see appendix (Catalog of .eld files and paint bar code to be found in appendix) Anything else unless it's a derivative to enhance any of the above without adding lag to it is probably a waste of time. Technical indicators are lagging in nature, as they only indicate past performance. Price action is all that is needed and when using tick/share charts, volume indicators are unnecessary. Volume indicators provide little information. Time and Sales is invaluable and provides all the volume information needed. This is widely known as reading the tape. (screen time) Don't complicate things, it all comes down to what is big volume doing, buying or selling. However, there are some useful for strength/weakness references, entries and exits. Examples as follows: TRENDLINES, as many as you need to determine the current trend. (Hand placed preferred) FIBONACCI RETRACEMENT LINES, (Anek's favorite) 50% from last swing low/high provides an excellent entry point. Problem is sometimes the trend is so strong it won't even give you your wish and you miss the fill. Used to predict targets not trends, for the trend you got price. Trend line pierced with a body that closed (not a wick but body) and nothing but higher lows. Falling knives rarely make higher lows, when they do; it's most possibly a reversal. Avoid the following technical indicators: Any indicator that is not 100% based on price action. Divergence never found to be very reliable so stopped looking for it. STOCHASTICS: A cross can be a powerful tool when you are looking for an entry in a strong trend. (5,3,3) but not recommended for AHG BOLLINGER BANDS: (Volatility indicator only, everything else it's not that hot) With 2.5 Standard Deviation. (2.0 gets hit far too often and distracts with noise) When price is continuously hitting a band, pay attention. It's trying to tell you which side is stronger. If you are having difficulty identifying the current trend or suspect a reversal, the price hugging a particular band can provide great info as to where momentum is headed, but not recommended for AHG MACD: (Not recommended) Extremely slow, late entry by 3-4 bars, leaving profits behind on entries and exits. Its divergences signals are good approximately 50% of time, random, and useless. It is nothing but the derivative of two LAGGING indicators (Moving Averages). You are better off learning CCI, in fact you are better off with price action alone, no stochastic either. Only TA tools for required for trading Highs Lows Double Tops Double Bottoms Time and Sales Trend lines Support/Resistance STEP 4 - MONEY MANAGEMENT DO NOT AVERAGE DOWN unless attempting to get fills for your intended car size, never surpassing it. Advanced money management technique, an average up approach is highly recommended. (More on this later, until then, use the same car size on every play) STEP 5 - DISCIPLINE Trading is not for the irresponsible. Break the rules and you will eventually lose big, period. Trading will forgive you if you were wrong on a play even several plays; it will not forgive or tolerate stupidity. STEP 6 - CHART TYPES Long bars are evil, highly recommend tick/share charts, provide ability to split the data and examine it with care. For the YM recommend 75 or 89 tick charts. This differs greatly from one instrument to the other, the greater the volume/activity it has, the greater the ticks size you will need. Adjust tick/share volume depending on how current day is developing. If low volume day, may even go down to 150, 100. etcâ¦ Adjust for best view and what you are most comfortable with.