24 October 2017
Holy Grail - Perfect Chart Patterns and Trading Strategy
A perfect chart pattern has following characteristics,
1. Daily chart SMA200 trending up steadily. It represents the cost of the long term investors with a view of 1 year is rising steadily, which indicates the market direction is up since the direction of the market is determined by the long term investor such as institutions, retirement funds, sovereignty funds etc..
2. Weekly chart SMA200 (i.e., daily chart SMA1000 or SMA999) trending up steadily. It represents the cost of the super long term investors with a view of 4 years is rising steadily, which indicates the long term market direction is up since the long term direction of the market is determined by the long term investor.
3. Daily chart SMA200 has crossed and is above Weekly chart SMA200
4. A beautiful double bottoms pattern has developed above and near the daily chart SMA200
Trading Strategy
1. Entry method: Buy stop limit at the moment when neckline of the double bottoms pattern is broken upwards
2. Position sizing: Number of shares to buy = Bearable loss or risk per trade / (Entry price - Stop loss price)
3. Stop loss: Initial stop loss price = Lowest point of the double bottoms pattern X 0.97
Bearable loss or risk per trade = Trading capital X 0.1% to 0.5% or maximum 1.0% purely depending on individual risk appetite.
Trade heavily (risk = 1.0%) when such a perfect setup appears since it is rare.
I managed to capture CityDev only a few days ago in the following examples. You would not have to work for one month should you capture any of them.
1. Daily chart SMA200 trending up steadily. It represents the cost of the long term investors with a view of 1 year is rising steadily, which indicates the market direction is up since the direction of the market is determined by the long term investor such as institutions, retirement funds, sovereignty funds etc..
2. Weekly chart SMA200 (i.e., daily chart SMA1000 or SMA999) trending up steadily. It represents the cost of the super long term investors with a view of 4 years is rising steadily, which indicates the long term market direction is up since the long term direction of the market is determined by the long term investor.
3. Daily chart SMA200 has crossed and is above Weekly chart SMA200
4. A beautiful double bottoms pattern has developed above and near the daily chart SMA200
Trading Strategy
1. Entry method: Buy stop limit at the moment when neckline of the double bottoms pattern is broken upwards
2. Position sizing: Number of shares to buy = Bearable loss or risk per trade / (Entry price - Stop loss price)
3. Stop loss: Initial stop loss price = Lowest point of the double bottoms pattern X 0.97
Bearable loss or risk per trade = Trading capital X 0.1% to 0.5% or maximum 1.0% purely depending on individual risk appetite.
Trade heavily (risk = 1.0%) when such a perfect setup appears since it is rare.
I managed to capture CityDev only a few days ago in the following examples. You would not have to work for one month should you capture any of them.
Labels: Stock Trading System
