ICT Liquidity - The Financial Market's Zero Sum Game | Michael J. Huddleston

For a trader or institution to buy or sell an instrument, stock, currency pair, etc. it is necessary that there is another trader or institution or 'the crowd' with the equivalent opposite position. If the smart money (capital controlled by institutional investors, market mavens, central banks, funds, and other financial professionals) wants to buy a financial instrument, they will need sellers in the market. Our presumptions are: 

1. All financial markets are a zero sum game. 
2. In all financial markets price is generated and driven by the market maker's auction algorithm. 
3. The market maker's price generating algorithm continuously calculates, re-balances and manages the flow of orders always in line with the fundamental 'Minimum of 50% Retracement-Rule across all time-frames: fractions of a second, minutes, hours, days, weeks, months and quarters. 
4. The algorithm generates the mathematically highest possible return for the market maker.
   

 

For the market makers, for the big dealers in the exchanges - for the smart money - liquidity is provided by the dump money, by the crowd, at levels where the dump money usually has its Stop loss, Buy and Sell orders. Driving price beyond these order-levels, the market maker collects liquidity - the money of the uninformed. Smart money activates these stop, buy and sell orders to feed and place their contrary positions in the market. Richard D. Wyckoff - a brilliant speculator, and later on a broker and market maker himself - explained the accumulation and distribution process of the 'market maker' - of the Composite Operator - in all detail ninety years ago. The Composite Operator manipulates the price in order to collect 'free money'. Liquidity.  

 

There are two types of liquidity:

1.          Buy Stops Liquidity (BSL)

The BSL is originated by Stop Losses of sell orders, after the BSL is taken, the market reverses to the downside, because banks use the BSL to place sell orders in the market. 

 

 

Regarding Buy Stops Liquidity (BSL) focus on:
PMH - Previous Month's High
PWH - Previous Week's High
PDH - Previous Day's High
HOD - High Of Day
OLD HIGH - Swing High
EQUAL HIGHS = Retail Traders' typical 'Resistance'.

When BSL is taken, the market reverses to the downside.

 

2.          Sell Stops Liquidity (SSL)

The SSL is originated by Stop Losses of Buy orders, after the SSL is taken, the market reverses to the Upside, because banks use the SSL to place Buy orders in the market. 

 

 

Regarding Sell Stops Liquidity (SSL) focus on:
PML - Previous Month's Low
PWL - Previous Week's Low
PDL - Previous Day's Low
LOD - Low Of Day
OLD LOW - Swing Low
EQUAL LOWS = Retail Traders' typical 'Support'.

When SSL is taken, the market reverses to the upside.

 

The Stop Hunt (SH) is a manipulation movement used by the Market Makers to neutralize liquidity (stop losses). It's a false breakout above /below the zone where there is liquidity. Market Makers usually use High Impact News to take liquidity.
 

High Impact News Calendar

Always pay attention to the news calendar, to know the pairs that will move, generally, pairs with many news forecasts('High Impact'), those currency pairs, stocks, bonds, etc. are going to move (trending) during the day or week.

Reference:
WadeFX (2021) - Market Structure & Powerful Setups.

See also:

Richard D. Wyckoff (1931) - The Wyckoff Method of Trading in Stocks.

Jason A. Jankovsky (2007) - Buy/Sell 50% Retracements. 

2022 ICT Mentorship.
2022 ICT Mentorship - Notes.

TPR (2022) - Richard D. Wyckoff's Accumulation & Distribution Schematics.

TPR (2022) - The Daily & the Weekly Market Maker Cycles: ICT Intraday Trading Templates. 
TPR (2022) - Daily Range = Accumulation + Manipulation + Expansion + Distribution (AMD). 

The BS Asymmetry Principle

» We must confess that our adversaries have a marked advantage over us in the discussion.
In very few words they can announce a half-truth; and in order to demonstrate that it is incomplete,
we are obliged to have recourse to long and dry dissertations. «
Frédéric Bastiat, Economic Sophisms, First Series, 1845

See also:
Harry G. Frankfurt (2005) - On Bullshit.

 

NR4 & NR7 (Narrow Range 4 & 7) and ID (Inside Days) | Toby Crabel

Narrow range patterns were described by Tony Crabel in his book, "Day Trading with Short Term Price Patterns & Opening Range Breakout". Even though it was published in 1990, many of Crabel's concepts and set-ups are still effective, and in particular his NR4 (Narrow Range 4) and NR7 (Narrow Range 7) patterns became quite popular with short-term traders. The idea for set-ups is similar to the Bollinger Band Squeeze or Short-Squeezes and Long-Squeezes in general: a volatility contraction is followed by a volatility expansion; narrow range days mark price contractions that precede price expansions. The NR7 day and the NR4 day as such are 'neutral' when it comes to future price direction, and other tools need to be employed to determine directional bias. Because NR4/NR7 days are relatively commonplace and the range is small by definition, the chances of whipsaw are above average. A break above the NR7 high can fail and be followed by a break below the NR7 high. Just be aware of this probability and keep the bigger picture in mind. In other words, be wary of sell signals within a bullish pattern, such as a falling flag or at a support test.

 

Examples of Narrow Range 7 Inside Days (IDnr7) in the Nasdaq.

Traders will want to qualify NR7 signals because they are quite frequent. A typical instrument will produce dozens of NR7 days in a twelve month period and a daily scan of US stocks will often return hundreds of stocks with NR7 days. Traders can increase or decrease the number of narrow range periods to affect the results. A decrease from NR7 to NR4 would increase the number of instruments fitting the criteria, while an increase from NR7 to e.g. NR20 would decrease the number of signal days. Consider NR7 and NR4 days that are at the same time Inside Days (IDnr4, IDnr7) also as signal days (see chart above).

Strategy: This strategy starts with the day's range, which is simply the difference between the high and the low. Crabel used the absolute range, as opposed to the percentage range, which would be the absolute range divided by the close or the midpoint. Because we are only dealing with four and seven days, the difference between the absolute range and percentage range is negligible. Crabel focused on two different narrow range timeframes: four days and seven days. An NR4 pattern would be the narrowest range in four days, while an NR7 would be the narrowest range in seven days. It is a very short-term pattern designed to initiate a trade based on an "opening range breakout", which is another term from Crabel's book. Look for an upside breakout when prices move above the high of the narrow range day and a downside breakdown when prices move below the low of the narrow range day.

Bull Signal:

1. The daily bias is bullish.
2. Identify a NR4, a NR7, an IDnr4 or an IDnr4 day.
3. Buy on move above high of narrow range day high.
4. Set trailing stop-loss.

Bear Signal:

1. The daily bias is bearish.
2. Identify a NR4, a NR7, an IDnr4 or an IDnr4 day.
3. Sell on move below low of narrow range day low.
4. Set trailing stop-loss.

Targets: Because this is a short-term setup, it is important that the trade starts working right away. Failure to continue in the direction of the signal is the first warning. After a buy signal, a move below the low of the narrow range day would be negative. Conversely, a move above the high of the narrow range day would negate a sell signal. Consider profit targets and stop-losses. Crabel took profits quite quickly, usually at the close of the first trading day or on the first profitable close. Again, this is very short-term-oriented and might not be suitable for all traders. Alternatively, profits can be taken near the next resistance levels or a percentage target can be used. Base stops on previous highs and lows, the Average True Range (ATR), etc. For example, the stop-loss on a long position could be set two ATR values below current prices and trailed higher.

 

Reference:
Toby Crabel (1990) - Day Trading With Short Term Price Patterns and Opening Range Breakout.

Toby Crabel (1990) - Inside Days in the S&P 500.

 Oddmund Groette (2023) - NR7 Trading Strategy (We Improved It).
Oddmund Groette (2023) - Inside Day Trading Strategy – Does It Work? (Backtest). 

TPR (2023) - Trend Continuation Entry Strategies.

Buy/Sell 50% Retracements | Jason A. Jankovsky

Fifty percent retracements are important because they balance the net inequality between the competing net order flows [...] Fifty percent retracements happen because once enough buyers square off against enough sellers, only half of those contracts will be profitable. At the 50% number, exactly half the bulls have a profit and half the bears have a profit. When I say this, it is important to note that this is a net perspective. The actual result to any one trading account isn’t the issue. If you could find a way to look into the total number of open trades, you would see that of the sum total of the open longs, about half of that total number of open contracts will have an open-trade profit—the others will have losses. In other words, if there were 10,000 open longs, around 5,000 of them will have some open-trade gain and the other 5,000 will have some open-trade loss. The exact same situation will be accurate for the shorts. The market is now temporarily balanced from the net perspective. This situation won’t last long; it will only take a short time for new buying or selling pressure to come in. Whoever has the net advantage at that point will tip the balance. Most of the time it is in the original direction back toward the previous high or low because from the net perspective the late loser entered from the short-term trend—that is, the few days or so just before the 50% level is reached.

» You can make a fortune following this one rule alone. «
W.D. Gann - The Tunnel Through the Air, 1927

This is a factor of the Rule of 72. Most market participants operate on a time frame of 72 hours or less. That means that in all the various ways of creating a market timing signal that now is the time to initiate a position, most traders have gotten at least one signal in a 72-hour period and have executed, creating net order-flow. Once they have initiated, they must liquidate to accept their open-trade profit or loss. Most methodologies will have given the exit signal within that time frame as well, with the net result that almost everybody has gotten in and out at least once within a 72-hour period. If this process happens at a 50% balance point, the net result is usually a resumption of he previous trend.

 

Mark Fisher's Three-Day Rolling Pivot = 72 hours

How to use the rule: First you must select a significant high or low price previous to the price the market is currently retreating from. When I say significant price I mean a price that is around 72 bars back in time; also they are usually weekly, monthly, or daily price points. If we use a bullish scenario, you are looking for a previous important low price and the market is retreating from the most recent high. If you use a daily chart, your previous low price must be about 72 days/bars back or so, I find that on longer time frames anything substantially less is not as accurate, and anything significantly more is usually ignored by traders as “old data.” 

 

Place a 50% retracement study between the old low and the new high—that would be your best buy point. That point will be some time in the future that approximately reflects the 72-bar ratio. This is why a price could trade to a high. The opposite would be a sell point if you were tracking a rally in a bear market. But the underlying psychology behind the 50% retracement is not about resumption of a previous trend or a failed reversal; it is about the late trader who entered in the last 72 hours. 

 

Most people who initiate a position—about 80% of the total warm bodies sitting in front of a trading screen—are going to do at least one full round turn in the market just prior to the market reaching the 50% price area. The vast majority of those traders are looking to make money right now. If they follow standard technical analysis or use any of the most common methodologies, because the market was trending lower for more than 30 bars from the rejected high to the 50% point, they are looking to sell into the market and join the apparent downtrend currently in progress, from their point of view. Their focus is to get positioned on the short side because “the trend is your friend.” 

 

But the market has just become balanced momentarily. That means only one thing. The shorts from above the market will cover; they have the most recent 72-hour open-trade profit. The late shorts cover, adding to the buy order imbalance as they take their loss. Last, the old longs on the greater-than-72-bar time frame (the 20% of long-term traders, the ones who know how to follow this rule—the professionals who know you need more than 72 hours to beat the loser) add to net winning open positions, many of which they have owned since the turn under the market. They know that the retracement is coming and it will draw in late blood. So they gladly sit through the 50% retracement with at least part of their original position. Of course, the exact opposite scenario develops when a declining market rallies 50%.

 

Gerald Marisch (1990) - Gann’s 50% Retracement Rule.

Now obviously, markets don’t always turn on a dime once they retrace 50%. Sometimes they take more time to balance temporarily; sometimes they need several more or fewer bars than 72; sometimes they sit at the 50% level for a bit and then retrace farther before moving back in the original trend. None of that is the point. The point is, if you want to make a lot of winning trades and keep it simple, enter your position at the 50 percent retracement point and wait. More often than not you will get at least something you can work with.

Reference:
Jason Alan Jankovsky (2007) - Trading Rules that Work.

See also:

 TPR (2023) - Trend Reversal Entry Strategies.

Galen Woods (2020) ‐ 50% Retracement Swing Trading Strategy.

Gerald Marisch (1990) - Gann’s 50% Retracement Rule. In: The W.D. Gann Method of Trading: A Simplified, Clear Approach.

W.D. Gann (1927) - The Tunnel Through the Air; or, Looking back from 1940.

20 Ridiculously Simple Rules of Trading | Dennis Gartman

1. Never, under any circumstance add to a losing position ... ever! Nothing more need be said; to do otherwise will eventually and absolutely lead to ruin!
2. Trade like a mercenary guerrilla. We must fight on the winning side and be willing to change sides readily when one side has gained the upper hand.
3. Capital comes in two varieties: Mental and that which is in your pocket or account. Of the two types of capital, the mental is the more important and expensive of the two. Holding to losing positions costs measurable sums of actual capital, but it costs immeasurable sums of mental capital.
4. The objective is not to buy low and sell high, but to buy high and to sell higher. We can never know what price is 'low'. Nor can we know what price is 'high'. Always remember that sugar once fell from $1.25/lb to 2 cent/lb and seemed "cheap" many times along the way.
5. In bull markets we can only be long or neutral, and in bear markets we can only be short or neutral. That may seem self-evident; it is not, and it is a lesson learned too late by far too many.
6. "Markets can remain illogical longer than you or I can remain solvent", according to our good friend, Dr. A. Gary Shilling. Illogic often reigns and markets are enormously inefficient despite what the academics believe.
7. Sell markets that show the greatest weakness, and buy those that show the greatest strength. Metaphorically, when bearish, throw your rocks into the wettest paper sack, for they break most readily. In bull markets, we need to ride upon the strongest winds ... they shall carry us higher than shall lesser ones.
8. Try to trade the first day of a gap, for gaps usually indicate violent new action. We have come to respect "gaps" in our nearly thirty years of watching markets; when they happen (especially in stocks) they are usually very important.
9. Trading runs in cycles: some good; most bad. Trade large and aggressively when trading well; trade small and modestly when trading poorly. In 'good times', even errors are profitable; in 'bad times' even the most well researched trades go awry. This is the nature of trading; accept it.
10. To trade successfully, think like a fundamentalist; trade like a technician. It is imperative that we understand the fundamentals driving a trade, but also that we understand the market's technicals. When we do, then, and only then, can we or should we, trade.
11. Respect 'outside reversals' after extended bull or bear runs. Reversal days on the charts signal the final exhaustion of the bullish or bearish forces that drove the market previously. Respect them, and respect even more 'weekly' and 'monthly', reversals.
12. Keep your technical systems simple. Complicated systems breed confusion; simplicity breeds elegance.
13. Respect and embrace the very normal 50-62% retracements that take prices back to major trends. If a trade is missed, wait patiently for the market to retrace. Far more often than not, retracements happen ... just as we are about to give up hope that they shall not.
14. An understanding of mass psychology is often more important than an understanding of economics. Markets are driven by human beings making human errors and also making super-human insights.
15. Establish initial positions on strength in bull markets and on weakness in bear markets. The first 'addition' should also be added on strength as the market shows the trend to be working. Henceforth, subsequent additions are to be added on retracements.
16. Bear markets are more violent than are bull markets and so also are their retracements.
17. Be patient with winning trades; be enormously impatient with losing trades. Remember it is quite possible to make large sums trading/investing if we are 'right' only 30% of the time, as long as our losses are small and our profits are large.
18. The market is the sum total of the wisdom ... and the ignorance ... of all of those who deal in it; and we dare not argue with the market's wisdom. If we learn nothing more than this we've learned much indeed.
19. Do more of that which is working and less of that which is not: If a market is strong, buy more; if a market is weak, sell more. New highs are to be bought; new lows sold.
20. The hard trade is the right trade: If it is easy to sell, don't; and if it is easy to buy, don't. Do the trade that is hard to do and that which the crowd finds objectionable. Peter Steidelmeyer taught us this twenty-five years ago and it holds truer now than then.

Quoted from:
Mark B. Fisher (2002) - The Logical Trader. Appendix 1:
Dennis Gartman - 20 Ridiculously Simple Rules of Trading.

The Enigma of 24 | Robert Edward Grant

 

1. 24  =  4 x 3 x 2 x 1 — Pythagoras’ Tetractys
2. (((10^.5) / 10) + 1) ^ 1 / .24)-(((((4 / π) / 2) + 1) * 10^2) / 360) * 10^-3 = 3.1415926 (perfect π to six decimal places)
3. 360°- (φ x 360°) = 2.4 Radians (137.51°—The Golden Angle), (One Radian = 57.296°)
4. Fibonacci Numbers in Digital Root (Mod 9) analysis (reduction to single digit thru simple addition in Mod 9) PATTERN REPEATS every 24 numbers
5. Musical scales possess 12 notes per Octave (sine wave) and an additional 12 notes for the next octave (cosine), there are 24 total Major and Minor Keys
6. The Vector Equilibrium (Cube Octahedron) has 24 edges
7. >3 All Prime Numbers (and Quasi Primes) are arranged in Mod 24 (spoke 1, 5, 7, 11, 13, 17, 19, 23) without exception
8. >3, All Prime^2 values are multiples of 24,+1 without exception
9. The full Flower of Life has exactly 24 circles in its outermost perimeter
10. (π^π) / (e^e) = 2.4

What is it about this number? Is it because it is the smallest of only three Prime and Quasi Prime number pairs (.571 (Ω) and 175 (1/Ω)/.731 (α) and 137 (1/α)) whose Reciprocal Value is equal to it’s Palindrome (24 has a Palindrome of 42 AND 1/24 = .042). Interestingly and even more enigmatically 137/57 = 2.4 AND 175/73 = 2.4 as well …

Also, we have 24 hours in one day, and the Sum of Interior Angles of a 24-sided polygon (Icositetragon) is 3960°… which also happens to be the exact Radius of the Earth in miles … Was Hitch Hiker’s Guide to the Galaxy right after all in proposing that the ANSWER to the Universe really is 42 (and therefore it’s reciprocal value of 24)?

Reference:
Robert Edward Grant (2019) - The Enigma of 24.

 

See also:

TPR (2023) - Chinese 24 Solar Terms & Lunar Cycles in 2023.

Syria Warns the US: "Stop the Oil and Gas Robbery! Get Out Immediately!"

The United States tries to overthrow Syrian governments through different proxies like Israel and the Muslim Brotherhood since the 1970ies, and since 2011 through al-Qaeda, Jabhat al-Nusra, the Islamic State of Iraq and the Levant, more radical Jihadi terrorists and militias as well as through substantial US military forces inside of Syria. As a consequence more than half of Syria's population of 23 million is displaced from their homes, 5.5 million fled the country, and estimates of the total number of deaths, in what is framed as 'the Syrian civil war' by the West, vary between 603,064 and about 620,000 as of August 2023. 

 

On September 10, 2023 the Syrian Ministry of Foreign Affairs sent a letter to the Secretary-General of the United Nations Antonio Guterres and the President of the Security Council Ferit Hoxha, demanding that they put an end to aggressive practices and violations of the principles of international law and the provisions of the UN Charter, which are being committed by the United States of America and its military forces that are illegally present on one third of the territory of the Syrian Arab Republic - on more than sixty thousand square kilometers - in the northeast and in the Al-Tanf region in the southeast of the country (yellowish and light green on the map below). 

 

While the United Nations so far does not even recognize the illegal US presence and occupation in Syria as a fact,
the rate of theft was around 100-130 thousand barrels per day and recently reached 150 thousand barrels per
day in addition to 59.9 million cubic meters of natural gas and 413 thousand tons of domestic gas.

The Ministry pointed out that the United States of America and its tools continue to violate sovereignty and plunder the country’s wealth and strategic resources, with the aim of exacerbating the effects of illegal unilateral coercive measures and depriving Syrians of the capabilities of their homeland and increasing their suffering. The Ministry added that the value of the damage caused to the Syrian oil and mineral wealth sector as a result of acts of aggression, looting and sabotage committed by the US forces and their terrorist tools amounted to a total of $ 115.2 billion during the period from 2011 until the end of the first half of the year 2023. The Ministry stated that the latest statistics and estimates of the losses of the oil sector in Syria show that the value of direct losses amounted to $ 27.5 billion, resulting from the following: The theft, waste and burning of extracted oil quantities estimated at 341 million barrels. The rate of theft was around 100-130 thousand barrels per day and recently reached 150 thousand barrels per day in addition to 59.9 million cubic meters of natural gas and 413 thousand tons of domestic gas. The value is $21.4 billion. Vandalism and theft of facilities, resulting in damages amounting to $ 3.2 billion. 

 

Dana Stroul, Deputy Assistant Secretary of Defense for the Middle East, US-Department of Defense, October 2019:
"The US now owns one third of Syria, all of the hidrocarbons, and the country's food basket. The rest is rubble."

The so-called ‘international coalition’ bombed oil and gas facilities in Syria, with the amount of damage amounting to $2.9 billion. The Ministry continued that the indirect losses amount to $87.7 billion, which represents the value of the lost benefits (from crude oil, natural gas, and domestic gas) as a result of a decrease in production below the planned rates under normal working conditions. Syria demanded that American officials be held accountable for these thefts and that the American administration be forced to compensate for them, end the illegal presence of American forces, and return the lands it occupies, oil and gas fields and other natural resources to the Syrian state to ensure improving the humanitarian and living conditions of the Syrians.

Reference:
SANA (Sep 10, 2023) - Syria: Washington and its terrorist tools continue to plunder Syrian strategic resources.

Map of Syrian Civil War - Syria news and incidents today (live map)
Kevork Almassian (Sep 15, 2023) - Syria's Warning to America: Get Out Immediately and Cease Oil Robbery! (video)

South Front Analysis & Intelligence (2023) - Updates on the Military Situation in Syria.
Wikipedia (2023) - Casualties of the Syrian civil war.

MFA of the People's Republic of China (2023) - US Hegemony and Its Perils.

Trend Reversal Entry Strategies

Trend-Reversal Entry Strategies aim to buy at or near the bottom and to sell at or near the top. Advisors and educators often reject these strategies because their technical analysis relies on lagging indicators. However, there are three high probability two-bar reversal patterns: the Reversal Day, the Signal Day and the Snap-Back Reversal Day. These are low-risk trend-reversal entry strategies for short-term trading and swing-trading. The set-ups are identified on the daily chart and the entries executed on the hourly chart or lower timeframes. The profit/loss ration needs to be 1.5 or more. Proper knowledge of market structure and price action is required.

 

How reliable are these 'text book' patterns?
Brent Penfold (2017) - Reversal Patterns.
Oddmund Groette (2023) - Reversal Day Strategy Backtest – Does It Work?

Reversal Day Trade Entry Set-Up

A Reversal Day top forms when price makes a new daily high but the day closes below the prior day's close. The current day's open and the trend to new highs is not sustained by the close. Variations of the Reversal Day are the Key Reversal Day, the Outside Reversal Day and the Outside Key Reversal Day.

 

 

On a Key Reversal Day the market opens below the prior day's close, makes a new high, but closes below the prior day's close and the current day's open. A Key Reversal Day is a stronger reversal signal than a Reversal Day. Outside Reversal Days and Key Reversal Days are both Outside Days and meet the criteria of the Reversal Day. Outside Reversal Days are stronger reversal indicators than Reversal Days, and Outside Key Reversal Days are even more convincing that a daily reversal has taken place. In all cases the Initial Protective Stop Loss is one tick above the high.

Signal Day Trade Entry Set-Up

A Signal Day opens above the prior day's close, makes a new high and the close is below the current day's open. The open must be in the top 1/3 of the daily range and the close must be in the bottom 1/3 to qualify as a valid Signal Day. Unlike a Reversal Day, the Signal Day's close does not have to be below the prior day's close, only below the current day's open.

The Gap Signal Day is a very strong daily reversal indicator. The entire daily range of the Gap Signal Day is above the prior day's range, leaving a gap at the end of the day. Considering the positive up close as bullish is a misleading view of a Gap Signal Day.

 

In both cases the Initial Protective Stop Loss is one tick above the high of the Signal Day.

Snap-Back Reversal Day Trade Entry Set-Up

This is a two-day reversal setup. On Day One the market makes a new high with an open in the lower 1/3 of the daily range and the high in the lop 1/3. It appears to be a very bullish day. Day Two is the Snap-Back Day with the open in the top 1/3 of the daily range and the close in the bottom 1/3. Day Two does not have to reach new highs or lows compared to Day One. The wider the range of Day One and Day Two, the stronger the indication for a reversal. A stronger Snap-Back Reversal Day has Day Two's open below Day One's close with a new daily low and a close below the prior day's low. 

The Initial Protective Stop Loss is one tick above the higher of the two days.

 

All of the above daily reversal patterns frequently occur within a trend without resulting in a sustained change of trend. Hence daily reversal set-ups are only to be considered valid when time, price and patterns are indicating a termination of the trend. 

Reference:
Robert C. Miner (2002/2022) - Dynamic Trading.

Dynamic Concepts in Time, Price & Pattern Analysis with Practical Strategies for Traders & Investors.

Brent Penfold (2017) - Reversal Patterns.

 Oddmund Groette (2023) - Reversal Day Strategy Backtest – Does It Work?

Oddmund Groette (2023) - 200+ Quantified S&P 500 Trading Strategies. 

Trend Continuation Entry Strategies

Trades can be entered after a new trend is already established. There are three low-risk trend continuation entry strategies for short-term trading and swing-trading. The set-ups are identified on the daily chart and the entries executed on the hourly chart or lower timeframes. The profit/loss ratio needs to be 1.5 or more. Proper knowledge of market structure and price action is required.

 

Inside-Day Trade Entry Set-Up

The price range of an inside-day is within the price range of the previous day. An inside-day is a day of indecision. It is a day when traders do not have strong conviction as to the trend of the market. An inside-day often occurs after a wide-range day when the range exceeded the average range of the prior few days. Inside-days also often occur either after a trend reversal or after a fast move as a brief period of consolidation within a larger trend. Usually, the direction of the breakout from the inside-day is a continuation of the direction prior to the inside-day. 

Inside Day Buy Set-Up Rules:

1. Only enter in the direction of the trend  against the last pivot reversal.
2. Enter a buy position, as long as the low of the day prior to the inside-day has not been exceeded, or, on the day following the inside-day, buy at one tick above the high of the day prior to the inside-day.
3. Place the initial protective sell stop one tick below the lower of the low of the inside-day or the low of the entry day.

Outside Day Trade Entry Set-Up

An outside-day is a period of range expansion. A market usually continues in the direction of the close of an outside-day. The outside-day entry setup requires the market to be monitored during the day.

 

Outside Day Buy Set-Up Rules:

1. Only enter in the direction of the trend.
2. For a buy set-up, if the market first exceeds the low of the prior day without having exceeded the high of the prior day, buy one tick above the high of the prior day.
3. Place the initial protective sell-stop one tick below the low of the entry day up to the time the trade is entered.
4. Exit the position on the close if the close is below the current day's open and prior day's close. The failure of the close to be in the anticipated trend direction is a negative signal and reason to exit the trade.

Pull Back Trade Entry Set-Up

The Pull-Back entry strategy is based on the observation that minor corrections in trending markets usually only last some three days. The Pull-Back trade set-up enters a trade on minor corrections against the main trend.

 

 

Pull Back Buy Set-Up Rules:

1. Only enter in the direction of the trend.
2. For a sell set-up, the three most recent days must each have higher highs or any combination of two higher highs and an inside-day. Just the opposite for a buy set-up.
3. For a sell set-up, place a sell-stop one tick below the low of the prior day once the set-up conditions are met.
4. If the market makes a new high, adjust the sell-stop one tick below the low of the prior day.
5. Place the initial protective buy-stop one tick above the higher of the high of entry day or the day prior to entry.
6. Exit the position on the close of the entry day if the close is above the current day's open and the prior day's close.

Keep in mind, no single strategy is bulletproof, stop-loss strategies must be in place and the profit/loss ratio 1.5 or more. Trading is about probabilities and losses part of the trading-business.
 

Reference:
Robert C. Miner (2002/2022) - Dynamic Trading.

Dynamic Concepts in Time, Price & Pattern Analysis with Practical Strategies for Traders & Investors.

Oddmund Groette (2023) - Inside Day Trading Strategy.
Oddmund Groette (2023) - Outside Day Trading Strategy.
Oddmund Groette (2023) - 200+ Quantified S&P 500 Trading Strategies. 

Crude Oil Near Weekly Reversal

After 3 weeks of rise out of the Aug 24 (Thu) low, Crude Oil is nearing a weekly high.
This week may complete another full 3 x ATR advance out of the Sep 08 (Fri) low to 91.68 by Sep 15 (Fri). 

Then the minimum retracement target should be 50% down to around 84.75. Pump and Dump.

 See also:
Robert Miner (Sep 14, 2023) - CRUDE should complete a W.5, weekly high this week. 

Cameron Benson (2023) - The 3 Week Cycle.

Sell Rosh Hashanah & Buy Yom Kippur 2023 | Jeff Hirsch

Sell Rosh Hashanah, Buy Yom Kippur is aligning quite well this year with late September seasonal weakness and the notoriously treacherous week after quarterly options expiration, AKA Triple Witching (Fri, Sep 15th). It’s a few days before FOMC (Tue-Wed, Sep 19-20) with a market jittery on hotter inflation data.
 

Rosh Hashanah lands on Saturday 9/16 this year so we close the day before. This is right at the mid-month peak of the typical September pattern. Yom Kippur falls on 9/25 (Mon) which is the 16th trading day of the month, right around the seasonal monthly low point.

The thesis is that folks sell positions on Rosh Hashanah the first of the Days of Awe to rid themselves of financial commitments and then return to the market after Yom Kippur, the Day of Atonement. It is no coincidence that this coincides with the seasonal September/October weakness. The market has been tracking the 4-year cycle and seasonal trends to a T this year and the past 3. So this should make a great entry for the Q4 pre-election year rally.

Quoted from:
Jeffrey A. Hirsch (Sep 13, 2023) - Sell Rosh Hashanah Buy Yom Kippur Sets Up.

 

See also:
Jeffrey A. Hirsch (Sep 03, 2023) - S&P 500 Pre-Election Year Seasonal Pattern 1949-2022 vs 2023.

Jeffrey A. Hirsch (2014) - Best 6 Months.