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Short-Term Trading Strategy for Profit

Oct 12, 2024

Price Action Model 2: Short-Term Trading Plan

Overview

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

Preparation

  • Refer to the economic calendar (medium/high impact events)
  • Analyze market structure and weekly profiles
  • Determine the highest high and lowest low of the past 20 days for the dealing range
  • If necessary, extend the look back to 40 or 60 days

Opportunity Discovery

  • Identify discount arrays under Tuesday's European open price
  • Consider premium arrays if bias is bearish
  • If signal doesn't form on Tuesday, consider Wednesday

Trade Planning

  • Look for price manipulation opposite to trade bias
  • Aim for sharp movements (Judah swings)
  • Short above European open, buy below if conditions apply
  • Framework for short/long entries using standard deviations

Trade Execution

  • Bullish:
    • Note European open price on Tuesday
    • 15-minute optimal trade entry during retracement
    • After 2 a.m. EST, buy stop at Asian Range High
  • Bearish:
    • Note European open price on Tuesday
    • 15-minute optimal trade entry during retracement
    • After 2 a.m. EST, sell stop at Asian range low

Trade Management

  • Short:
    • Use a sell limit with entry at PD array minus 5 pips
    • Objectives: 50 and 75 Pips
    • Stop loss: Above high + 25 Pips
  • Long:
    • Use a buy limit at PD array plus 5 pips
    • Objectives: 50 and 75 Pips
    • Stop loss: Below low - 25 Pips
  • Adjust stop loss based on the percentage of profit objective achieved

Money Management

  • Position size calculation formula:
    • (Account Equity * Risk %) / Stop Loss in Pips
  • Example with account equity and stop loss calculations included
  • Adjust position size after losses or a series of wins

Practical Example

  • Explained through Euro Dollar chart analysis
  • Importance of understanding weekly range and candle expectations
  • Use of volume imbalances and PD arrays
  • Process demonstrated step-by-step with charts and calculations

Additional Guidance

  • Highlight on the importance of understanding weekly charts and daily actions
  • Encouragement to practice and integrate model specifics into personal trading plans

Conclusion

  • The strategy is structured, precise, and adaptable
  • Demonstrated in a real-world context with Euro Dollar analysis
  • Encourages individual adaptation and further learning
  • Next session on model 3 scheduled for May 14th

Full transcript