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Choosing Your Setups

Choosing Your Setups 2017-05-18T21:38:36+00:00

To a certain degree you want to trade the type of style that fits your personality but more than anything you want to trade what works and is profitable.

  • Simply trading in the direction of the trend defined by the TrendCCI is enough to be constantly profitable.

No matter the type of setup you are choosing to trade (trend following, Fib retracement, or support and resistance) trades can only be executed in the direction of the trend defined by the TrendCCI.

  • TrendCCI with a positive reading (above zero) = only Buy side trades
  • TrendCCI with a negative reading (below zero) = only Sell side trades

This means if you are trading off of support and resistance for example and price is approaching or testing a resistance level you do not look to sell until the TrendCCI crosses back negative. Then you can take trades in the direction of the trend as it was rejected by the resistance line but not before the trend changes.

Traders may look to place trades as price moves above these S/R areas rather than waiting for the price to change direction. Thinking the advantage is that you can get a better price entry when the the trade drops and as volume sells away it comes down and picks up these trades and then the game is to manage as price moves in your favor but in reality will be taking trades too early and stretched into hitting their stop loss.

I understand that desire to get into the trade as close to the support line as possible (therefore taking the trade against the trend) but here is the thing, it is not a high probability setup. By waiting for price to begin bouncing off of the support and for the trend to change (on the 5 minute time frame so it is pretty quick) you are then looking now to take trades bouncing off of support and with the trend. This is a much higher probability setup placing things more in your favor. A little patience and then bounce.

Similarly with Fib retracements if you are buying off of a 38.2%, 50%, or 61.8% retracement you do not begin buying until the TrendCCI has first turned positive when bouncing off the Fib instead of when it touches the retracement level.

In both situations this is going to protect you from entering the market too soon. Because support & resistance is meant to be broken and you never know when that is going to happen. By following the TrendCCI you are taking higher profitability trades only.