Position Trading Strategy and Management

Oct 12, 2024

Price Action Model 4: Position Trading Trade Plan

Overview

  • Target: 500+ pips per trade.
  • Process:
    1. Preparation
    2. Opportunity Discovery
    3. Trade Planning
    4. Trade Execution
    5. Trade Management

Trade Preparation

  • Economic Calendar: Focus on medium/high impact events.
  • Monthly Chart: Focus on seasonal tendencies.
  • IPTA Data Range: Last 20, 40, 60 trading days (exclude Sundays).
    • Identify highest high and lowest low.
    • Determine dealing range.

Opportunity Discovery

  • PD Array: Look inside dealing range for next draw on liquidity.
    • Target old high, low, fair value gap, or liquidity pool.
    • Aim for 500 pips movement.

Seasonal Tendencies

  • Use historical tendencies as a guide, not a rule.
  • Plan trading yearly around strongest seasonal tendencies.
  • Understand risk; use stops and don't over-leverage.

Trade Planning

  • Focus on Quarterly Shift Model: Trades around 2 months or longer.
  • Align trades with high probability seasonal tendencies.

Trade Execution

  • Bearish Setup: Short at 4-hour premium fair value gap, considering standard deviation.
  • Bullish Setup: Long at 4-hour discount fair value gap.
  • Use scalping protocols for risk reduction.

Trade Management

  • Bearish Targeting: Sell-side liquidity below old daily/weekly lows.
  • Bullish Targeting: Bullish liquidity above old daily/weekly highs.
  • Entry Timing: Use European open price for filtering entries.
  • Partial Take Profit: At 100 pips, 250 pips, and 500 pips.
  • Stop Loss Management:
    • Enter short: Stop above high + 25 pips.
    • Enter long: Stop below low - 25 pips.
    • Reduce stop loss progressively as profit increases.

Risk Management

  • R% Adjustments:
    • Lower R% after a full loss.
    • Increase R% after recovering 50% of loss.
    • Reduce R% after a series of five winning trades.

Practical Example: Eurodollar

  • Chart Analysis: Monthly, daily, and usage of commitment of traders report.
  • Seasonal Trend: April high, expected drop into May for Eurodollar.
  • Entry Strategy: Sell stop at order block open price after S/T high break.

Key Takeaways

  • Focus on simplicity and apply only necessary tools to your model.
  • Recognize and exploit high-probability seasonal tendencies.
  • Regularly review and study market conditions and previous trades to continually refine the model.