Welcome to my second video of thetrilogy dedicated to my strategy, the first video was about the indicators and this video will be dedicated to the entries of the strategy.
So, if youfamiliar with my analysis, my market analysis, every week, you know that thereis a sentence that I used to say every time, this is that the strategy is verysimple: what we have to do is to look for a trend on the Higher timeframes andonce we have a trend, we go down, we zoom on the lower timeframes to takevalid setup, ok ? So what is a valid setup? What are the rules? This is thepurpose of this video.
All right, so we have 3 main rules and someadditional rules.
The first rule is that we use pending order at the break of afractal box, so let's zoom the chart.
Here for example, we use a pending order atthe break of the fractal box.
For example, it could be as well for a short pendingorder.
here I don't say this is a valid setup, this is just an example.
We have the break of the lower level of the box and yourpending order is going to be triggered here alright? We use nearly only pendingorders because pending orders mean reflection, you need to think about whereyou gonna set your pending order usually it's one pip plus spread above or below the box, you need also to know the lot size so itdoesn't come from emotions but just logic and thinking.
In the contrary, themarket orders are very emotional, you don't have time to think usually, it's becauseyou are too late into a trade but it could happen sometimes that you checkthe chart in the morning, there was a setup, you have missed itbecause the price is already gone but it's close to your potential pendingorder so you can still enter into the trade or you have a second solution, forexample, we move to the h1 chart, here: this is a break of the fractal box, ok? 4o'clock on the 24th, its Gold/US dollar, you might missed it but if you go down to m5 you can look for pullback then therewill be a new entry, 2 hours later, it doesn't work all the time, sometimes theprices just go but if there is a small pullback you can use the break of thefractal box of the lower timeframes.
Second main rule, the SL must be close tothe entry point.
Before explaining what means to be close to the entry point, Ineed to remind you that when you enter into a trade, you should know exactlywhere to exit if the price goes against you.
So theexit is not the purpose of that video, it will be the subject of the third andlast video however for a sleeping alligator, I can tell you that the otherside of the fractal box will be our initial SL so this is veryimportant to check at the box, the fractal box size.
So there is noprecise rule usually 10 pips is okay for very fast timeframes like m1 and 30, 40pips will be okay for h1 chart, for example, I speak abouthere EUR/USD but this is more visual than anything for example, here you cansee quite large size of the fractal box and here you can see that it's a rathersmall so you really need to look at the size of the fractal box compared to theother ones, the previous ones and that will tell you what it's right as the sizeof a fractal box because for a sleeping alligator, the initial SL will bein the other side of the fractal box.
This setup 1, this first entry with thesleeping alligator, I am going to zoom a bit, it's called a betting entry, we are in abetting mode because we don't know if the price will go, sleeping alligator isa saddle point so the price could go either wayso that was we call that a betting phase however if the price goes in ourdirection, for example here, you can have a second entry.
here for example, you have a new fractal box at the break, here's my pendingorder above the fractal box and this time we are not in a betting modeanymore but in an investing mode, we know more about where the price could go, green lineor red line are our SL, this is a setup 2, it would be here or here, in this example, it could be the green line, I like green line more than red line, youalso can calculate if the stop loss is far away or not, if the price has notmoved that much and we had a pullback like here, it's still right to make anadd-on or eventually to take a first entry.
However when the price goes fastand far away from the green line obviously the SL will be far awayso this is not a valid entry, a valid setup.
Third and last main rule, thepoint of entry, the setup must be when the Ewave is close to the zero line, sofor example here, obviously, this is a sleeping alligator, so the entry corresponds to across of the Ewave zero line, a very strong signal, later, we have, after a small pullback, another entry possible, the bars of the histogram are still close to the zeroline, however we have here for example a fractal break but you can see that thebars of the Ewave are far away from the zero line, meaning that the SLis far away from the green line.
You will also avoid to take an entry when the bars of the histogram are coming back to the zero linemeaning that we are losing momentum in that impulsive wave.
We have also fewadditional rules: first of all, avoid to trade during the red news and especiallyif you trade lower timeframes like M1 M5 & M15 and also, of course, any timeframe, when you have big red news like the FOMC report release and also the releaseof the non-farm employment change in USA every month.
Second rule, because wetrade in the direction of the higher timeframe, well if the higher timeframeis in a corrective wave or there is no trend at all, you should avoid to tradeif the higher timeframe has no trend.
And finally, you should avoid to tradewhen you have a long flat Ewave.
Okay, now let's see the 3 kinds ofscenarios in which we can take a valid setup, first of all, the dreamy scenario, this is when the setup is while the higher timeframe is trendy so we go with thetrend, the second scenario is a bit more tricky, it's when there is no trend onthe higher timeframe and finally the last scenario is, when on the higher timeframe, the price is reversing.
For each scenario, we are going to look at 2 things: first of all, the double break of the fractal box for example, if I trade h1in the direction of h4, i will look for the double break H1-H4 of the fractal boxand secondly of course I will look at taking a trade at thecross of the Ewave zero line.
We have 2 points of entry, 2 kinds of entries: setup 1 and set up 2, the setup 1 is when we have a fractal box while thealligator is sleeping, for example, here, I zoom.
okay we have a sleepingalligator this is a balance point which means that theprice can go either way, in that case it's a bit risky, this is a betting phase, so we place the initial SL below here, the box, or in the other side of thebox and second type, the setup 2, let's zoom and see an example so this is thefirst entry, here, the break of the box with a sleeping alligator, the initialSL will be on the other side of the box and then the price goes, you havea small pullback forming a second fractal, second fractal box level and thiswill be the second entry: the break of the fractal box following the break of afractal box with a sleeping alligator, this is the second entry, the setup 2.
the setup one is the balance point, we don't know which way the price will gobut after this break and the new fractal box level, we are a bit more confidentabout the trade because the price is above the alligator and this time, theinitial SL will be the alligator lines, most of the time, the greenabove or here below the green line sometimes the red line but here you cansee that this is also a fractal box, a sell fractal forming a new lower level ofthe box so that will be perfect stop-loss, we say that the setup 1corresponds to a betting phase because we don't know which way theprice will go and the setup 2 corresponds to an investing mode because we havealready a kind of direction, the lines of the alligator are open.
So these are our3 scenarios and our 2 kinds of entry: setup 1 and setup 2.
let's see now an example for eachscenario, first scenario: an example on the gold/US dollar on the 2nd of Januaryof this year, this is the moment of the trade, on H4 you can see that, althoughthere is divergence between the price and the Awesome Oscillator, the lines ofthe alligator are still open and on the daily timeframe, it's a no-brainer since this isthe beginning (we think it's the beginning of the wave 5) it's animpulsive wave anyway and you can see the bars of the Ewave going away from thezero line, so its a no brainer here, the trend is bullish for all the higher timeframes.
Let's go back on the h1 example I'm gonna zoom it, this is a perfectsetup 1 since we have a sleeping alligatorthis is a tight box compared to the other sizes of the boxes and the Ewave is veryclose to the zero line, it's even better because it's on the way to cross the zero line so this is a setup 1, we put the pending order above the box with the stop-loss, initial SL on the other side of the box sleeping alligator is always a riskbecause it could go either way, to give you a picture:imagine a rock on the top of a hill who can fall in one side or the other sideof the hill so that's why we have a SL, initial SL on the oppositeside of the box.
The price is going to trigger the pending order then move up nicelyand we have a second entry, a setup 2 following the first entry at the nextbreak of the fractal box, the SL will be behind the green line for 62 pips which is not a lot for gold/US dollar so this is our 2 entries, 2 setups and if you look closely here there's a first break at 8 O'clock, there is a first break, here, the initial SL is there, at thetime there were no other sell fractals so it's 51 pips and then a second break, the both breaks are setup 1 because the price haven't moved yet andthis is still a sleeping alligator so we're still in the trade and you can add-on on the second S1 or just let it go so this is the perfect scenario when wehave an entry while the other timeframes, the higher timeframes are trendy sowe go with the trend.
Second example: on the USD/CAD H1 26th ofDecember.
Scenario which where we have a setup on h1 but there is no trend on thehigher timeframe so let's go back to the higher timeframes, first of all, the dailytimeframe, you can see here that's an up and down chart however now weare in a bearish move with the lines of the alligator open so it's still not toobad.
On h4 perfect sleeping alligator so no trendwe are in the wave 4 following that wave 3 we expect the wave 5 who will become, youcan see here, a new wave 3 down but at the moment this is a sleepingalligator with no trend but the overall trend is bearish.
Let's go back to the h1chart but before that, I put here the level of the boxon the H4 chart.
H1 chart with the zoom, you can see here the level of theh4 box, we have a kind of setup 1 because this is a sleeping alligator andthere is also a rule, when we don't have any trend on the higher timeframe likeyou can see sleeping alligator on H4, it's better to take the h4 break which ishere, you can see the line so the pending order will be there and on the otherside of the box that will be my initial stop-loss, the price is going to trigger thepending order here and after you can see that we have a very nice drop and thisis the example which where it's not obvious to take a set up 2 here because theprice has already moved a lot, something like 44 pips for yeah like +2%, it's not very close to the zero line butforty-four pips is not that much, you could here take the break with theinitial SL above the green line this is the second scenario.
Last example:trade in a countertrade so this is an example on USD/JPY on h4, on the daily timeframe you can see that there is not a lot of trend, here you have a small, I zoom it, bearish divergent candle there is divergence between the price andthe Ewave so we can look for a setup in the lower timeframe, so on H4, we havea setup here, beautiful box, you can see this is a countertrend because thepending order happened to be above the green line on D1, on h4, we take the setup, theprice is going to trigger the pending order and then the price is going to move, after hesitation, and go down and we are going to exit here for +3% I think so thisis a countertrend trade and this last example closes the video about theentries.
If you have any question please contact me on the section below or thesocial medias and I would like to invite you to follow the next video about theexits of the strategy.
Thanks for watching and see you soon for the third and lastvideo.