Indicators : CCI (Commodity Channel Index) (Download here)
Understanding Divergence
This tactic uses hidden cost and divergence action to just take a breakout trade. Divergence is the main one indicator that is key the market which can be of good use and isn't lagging. It's a sign of a market reversal approaching in the future that is near. Understanding and making use of divergence will assist a trader that is technical when analyzing the marketplace.
Note : On my CCI, i connect my peaks (tops) never the bottoms (dips). It is crucial it completely which you watch the video tutorial below with this tactic to realize.
Longer Breakout
- cost must be trending downwards
- CCI must go towards the direction that is upward bounce
- After a bounce on the CCI, connect your peaks being high your cost
- Aggressive : At a close that is clear the trend line enter long
- Conservative : After the trend line is broken, wait for a pullback towards the trend line to enter
Brief Breakout
- Price must be trending upwards
- CCI must go towards the direction that is downward bounce
- After a bounce regarding the CCI, connect your dips on your price
- Aggressive : At a close that is clear the trend line enter short
- Conservative : following the trend line is broken, wait for a pullback towards the trend line to enter
STOPS:
- If your trend line is perhaps not that steep, you could well keep your stops at the high/low of the breakout candle.
- If your trend line is high, keep your take a look at the swing high/low
- If your trend line is medium steep, keep your end at the low of couple candles away Exits
- 1:1 danger to reward. If for example the stop is -12 pips your limitation should really be pips which can be +12.
- start 2 lots. If your end reaches -10 pips, as soon as your trades goes on your side and also you're at +10 pips, close 1 lot and allow other one run.
Exit at Support and Resistance levels
- Exit during the nearest 50 or 00 level. These are psychological levels. (ensure your exit is at minimum equivalent quantity of pips as your end, otherwise dont enter the trade)
- Trailing Stop. Once in a trade, at the close of each candle, spot your stop 1 pip below the low (if in a buy trade). Vise versa for sell trade.
Short Example:
Long example:
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