Short-Term Trading Plan Overview

Oct 12, 2024

Price Action Model Number Two: Short-Term Trading Plan

Overview

  • Objective: 50 to 100 pips per trade.
  • Process Stages:
    • Preparation
    • Opportunity Discovery
    • Trade Planning
    • Trade Execution
    • Trade Management

Preparation

  • Refer to the economic calendar for upcoming medium and high-impact events.
  • Analyze weekly templates and market structures for potential range profiles.

Determining the Dealing Range

  • Look back 20 trading days (excluding Sundays) to find the highest high and lowest low.
  • If necessary, extend the look-back period to 40 or 60 days.

Opportunity Discovery

  • Identify discount arrays under European opening prices on Tuesdays and Wednesdays.
  • Use weekly range bias to predict price movements.

Trade Planning

  • Look for manipulation in price opposite to trade bias at times of expected volatility.
  • Seek sharp price movements, known as Judas swings, to enter trades.

Trade Execution

Bullish

  • Filter longs at or below the European opening price on Tuesdays.
  • Place a buy stop at the Asian range high plus one pip after 2 AM EST.

Bearish

  • Filter shorts at or above the European opening price on Tuesdays.
  • Place a sell stop at the Asian range low minus one pip after 2 AM EST.

Trade Management

Short Trades

  • Use sell limit orders based on standard deviation and PD array convergence minus 5 pips.
  • Set objectives at 50 and 75 pips, closing all at 100 pips.
  • Set stop loss 25 pips above the premium array.

Long Trades

  • Use buy limit orders with standard deviation and PD array convergence plus 5 pips.
  • Set objectives at 50 and 75 pips, closing all at 100 pips.
  • Set stop loss 25 pips below the discount array.

Stop Loss Management

  • Adjust stop loss based on profit percentage (25%, 50%, 75%).

Money Management

  • Position Size Calculation:
    • Formula: (Account Equity × R%) / Stop Loss in pips
    • Example: $20,000 equity with 1.5% risk and 20-pip stop loss allows 150 micro lots.
  • Reduce risk percentage after losses and winning streaks to stabilize equity curve.

Conclusion

  • Model number two focuses on capturing short-term price action with disciplined entry and exit strategies.
  • Emphasizes preparation and response to market dynamics based on structured analysis.
  • Encourages personalization and adaptation of the model to individual trading styles.

Next Steps: Continue practicing with demo accounts and review model components to solidify understanding before advancing to subsequent models.