Still testing out and reflection on the methodology of determining trend bias and entries. For the past 1-2 years, my entries have been based on flushes of boxes. However, can there be an earlier entry method?
Will I be able to detect the extremes earlier and place an entry to join in as first movers?
After all, a friend had reminded the most basic of successful trading is to buy low sell high.
How Basic is that!
My tentative summary of boxes entry will be that:
1) it is a clear cut way of entry but many a times entry may be late and stop loss higher. Of course if one is gunning for a few hundred pips then it may need to wait out for quite some time before price goes the right way. In the meantime an equally large amt of stop loss has to be set aside.
2) this strategy will work but since a large amount of SL has to be set aside then effectively it reduces the lot size at stake, thus decreasing profit potential
Shrewd money management will make a difference if strategy chosen is to batch in positions, with pit stops at various levels.
Key idea is to get in earlier positions, based on the belief that the general direction is correct.
understanding EMAs, mean reversion, RSI in conjunction with classic horizontal levels
Some of the criteria that I will want to look into will be the reaction of price when price itself suggests overextension via exponential MA.
When price is overextended and it is near to an area of strong support, there is a good chance that price may resume/kickstart the new trend.
Hence if I am positioned in for this particular swing , my assumption will be :
1) price moves in my direction because a strong support is reached,
2) and I am taking advantage of price being overextended. Previously, I had developed the belief limit orders are not good. I need to change this belief as when it is used properly, it can help to scale in good positions.
i) it may be possible to detect overextended price earlier and place a speculative entry.
3) RSI may suggest a new low or high.
Buy lowest Sell highest is possible with mean reversion confluenced with price action and strong levels.
However money management still make the difference and batching in positions is a tactical and shrewd way to minimize damage.