This video discusses a trading strategy that the narrator believes is the best and most consistent way for manual traders to stay profitable. The strategy involves multiple parts, including using a 200-period exponential moving average to filter the trend direction, waiting for price to pull back to at least the 20-period exponential moving average before entering, using the stochastic RSI and regular divergence for confirmation, and taking a multi-time frame approach.
The Best Way to Trade: A Multi-part Strategy
Introduction
Determining Our Trading Goal
Filtering the Trend Direction
Entering the Market at a Discount
Confirming the Trend Reversal
Multi-time Frame Approach
Regular Divergence for Timing Pullbacks
Putting It All Together
Introduction
After eight years of trading experience, the author believes that the best way to trade is through a multi-part strategy that involves several rules and roles. This style of trading is perfect for manual traders who want consistency and profitability in the long run.
Determining Our Trading Goal
The first step in developing the strategy is to determine our trading goal. The author suggests entering short positions at the peak of pullbacks in a downtrend and long positions at the bottom of dips in an uptrend. This way, we can position ourselves in the market with the highest probability of success.
Filtering the Trend Direction
Next, we need to filter the trend direction. The author recommends using a 200-period Exponential Moving Average (EMA) to determine whether the price is above or below the trend. When the price is above the 200 EMA, we only look for long positions, and when below, we only look for short positions.
Entering the Market at a Discount
To ensure that we enter the market at a discount, the author suggests using two EMAs, 20 and 50, as a filter. We should only enter the market when the price has pulled back to at least the 20-period EMA, preventing us from entering too early when the price is too extended. Additionally, we can use indicators such as Stochastic RSI and Hidden Divergence to further confirm that the trend is ready to continue.
Confirming the Trend Reversal
Another essential aspect of the strategy is confirming the trend reversal. We can use regular divergence on a lower time frame to identify when the pullback is likely to come to an end. In this way, we can time our entry to maximize our profits.
Multi-time Frame Approach
A multi-time frame approach can further enhance the strategy. By analyzing pullbacks on a lower time frame, we can confirm regular divergence and identify the end of a pullback. This allows us to enter the market with the highest probability of success.
Putting It All Together
By combining these rules and roles, we can create a comprehensive trading strategy that positions us to enter the market with the highest probability of success. With the right mindset and consistent application, this multi-part strategy can help manual traders become consistently profitable in the long run.