ANATOMY OF A TRADE
I woke up this morning and I my alert on atom had triggered
Step one. Identify an opportunity. I looked and I saw this.
https://www.tradingview.com/x/xKdn937X/
My alert was set at 20.4 and was set there confirming a W pattern and a break or retest of the last resistance of upward price movement. I had wanted to enter a trade here but I missed it. However does this mean I cannot profit off this move? Well lets see.
Step 2.
I drew a Fibonacci retracement on this impulse and noticed the pull back at the .382 level.
https://www.tradingview.com/x/BY7fy7PP/
This is a key level in a trade setup called the BOT that I learned in the level 1 course at The Rational Investor School for Trader Development which I do recommend you take if you are serious about making money from trading. This is based on the concept that in an uptrend often what happens before a retracement (a wave 1 in the Elliot Wave school of thought) if its truly an uptrend will happen after the retracement to .382 (wave 3 in the Elliot Wave school of thought.
Well, now I’m interested and its got my attention.
Step 3.
is to clone this fib and change the levels to help manage the trade.
https://www.tradingview.com/x/OPHwfyOo/
Now if price rises to the 25% level, I will enter the trade and when it reaches the 100% or 1 level then this is my take profit, and my stop loss is at at 21 right below the retracement level. This is all key to being a profitable trader. I have a trading account with 3000 for this example. You can use trading view to show you your Long Position prior to entering the trade.
https://bitsbettahavemymoney.com/wp-content/uploads/2021/04/JPEG-image-scaled.jpeg
As you can see If I am wrong I lose $60. If I am correct then I make roughly $180 this is a 3 to 1 risk ratio. My stop is 21, my entry is 21.5 and my sell is 23.5.
This is good because I don’t have to be right all the time and I can still be profitable. This is good because I am only risking $60 in this trade idea out of $3000
Step 4.
The Buy Order. Now there are money things that I look for to allow me to say that this is a valid trade. I use the Williams %R to determine if its oversold, I use On Balance Volume to confirm price direction, and the MacD histogram to monitor price direction, there is a lot going on just know you need reasons to enter a trade. This increases your probability of being correct. All my reasons are valid so I pull the trigger.
At 21.5 I opened my kraken account and rushed to enter a market order and was filled at 21.6913 for a total of 144 Atom. Normally I would have used a buy limit order and had been more precise but this is close enough.
https://bitsbettahavemymoney.com/wp-content/uploads/2021/04/IMG_2577-1.png
https://www.tradingview.com/x/lWv3SHfY/
Price breaks above W midpoint confirming move upward and continuation of the trend.
https://www.tradingview.com/x/lWv3SHfY/
Step 4A.
I entered my exit. On my forex account this would have been done in the same step as the order entry but I have not found away to do this on Kraken in one step.
On Kraken, I canceled my sell order and entered my take profit order. I reentered my stop loss as a conditional order.
https://bitsbettahavemymoney.com/wp-content/uploads/2021/04/IMG_2578.png
Now I can go about my day. I may move my stop loss to the .5 level once price structure is established above the .5 level to remove all risk of losing money but it is too early for that.
Please analyze this and ask yourself are you willing to learn how to draw Fibonacci lines?
Are you willing to dedicate time to looking for these patterns? This is not easy, it takes work, drive, patience, and discipline. If the answer is yes to al of these things then you may have what it takes to be a profitable trader.