Trading Secrets
Learn how to set up a profitable trading strategy using three key indicators: the Stochastic Heat Map, Pivot Point Upper Trend, and Volume Based Support and Resistance Zones. Use these indicators to identify overbought and oversold regions, catch trend reversals, and determine exit points. A bonus indicator, Breakout Probability Expo, can help predict the direction of the next candle.
Identifying Profitable Trades: Using Three Indicators to Maximize Trading Success
Trading in financial markets can be both exciting and daunting. With the constant flow of information and volatility, it can be difficult to identify profitable trading opportunities. However, using technical indicators can help to increase your chances of success. In this article, we will explore how to use three indicators–the Stochastic Heat Map, Pivot Point Upper Trend, and Volume Based Support and Resistance Zones–to create a winning trading strategy.
Setting up the Stochastic Heat Map
The first indicator we will use is the Stochastic Heat Map. This tool allows traders to identify oversold and overbought regions and is available on most trading platforms. The first step is to add the indicator to your chart by going to the indicators tab and typing in Stochastic Heat Map by Violence.
Once added to the chart, the next step is to adjust the settings. Start by changing the moving average from EMA to WMA. Then, choose theme 1 and adjust the increment from 10 to 8. Next, change the smooth fast length from 2 to 7, and the slow length from 21 to 26. Finally, adjust the plot number from 28 to 25.
Next, go to the style and adjust the two plots. The last two colors represent the K line and the D line. Change the color of the K line to orange and make it bolder. Make the last plot bolder as well. This will allow you to see the plots better. Once you are satisfied with the settings, click OK.
Understanding the Stochastic Heat Map
The Stochastic Heat Map combines multiple stochastic oscillators into a heat map. The green lines on the map represent overbought regions, while the red lines indicate oversold regions. When the lines cross over or under specific levels, traders use this as a signal to enter or exit trades. In this strategy, we will be using the Stochastic Heat Map as a confirmation tool.
Adding the Pivot Point Upper Trend Indicator
The next indicator we will use is the Pivot Point Upper Trend. This indicator is excellent for identifying buy and sell signals. To add this indicator to your chart, go to the indicator tab and type in Pivot Point Upper Trend by Lonesome.
Once added to the chart, it’s time to adjust the settings. Under inputs, change the Pivot Point period from two to three. The ATR factor should be lowered to 2.8, and the ATR periods should be changed from 10 to 8.
This indicator also has the option to show support and resistance levels. For this strategy, we will not be using this feature. Once you have made the necessary adjustments, click OK.
Using the Pivot Point Upper Trend Indicator
The Pivot Point Upper Trend indicator provides accurate buy and sell signals. When the indicator shows a buy signal, traders wait for confirmation from the Stochastic Heat Map. Specifically, traders wait for the K line to cross the D line in the oversold zone. Once this occurs, it’s time to enter a long position. The opposite is true for sell signals.
Using Volume Based Support and Resistance Zones
The final indicator we will use is Volume Based Support and Resistance Zones. This indicator shows traders areas of high liquidity where price is likely to find support or resistance. To add this indicator to your chart, go to the indicator tab and type in Volume SR by Tomi.
Once added, adjust the settings under inputs. This indicator is multi-timeframe, meaning it shows support and resistance zones from different timeframes on your chart. Traders can show support and resistance zones from up to four different timeframes. For this strategy, we will use three timeframes.
For the first timeframe, change the volume ma threshold from 6 to 8, and the number of zones back from 30 to 33. Change the resistance and support line color to the same (in this case, yellow).
For the second timeframe, double the time frame we are using. So, if we are on the four-hour chart, switch to the eight-hour chart. Use the same settings as for the first timeframe.
For the third timeframe, switch to the daily chart. Use the same settings as the other two timeframes.
Traders can use these three timeframes to identify areas of high liquidity where price is likely to find support or resistance. This information can help in setting stop losses and take profits.
An Alternative Indicator: Breakout Probability Expo
While these three indicators are a powerful combination to help identify profitable trades, an alternative indicator to consider is the Breakout Probability Expo. This indicator predicts the likelihood of the next candle going up or down based on the previous candle.
To add the Breakout Probability Expo to your chart, go to the indicator tab and type in Breakout Probability Expo. Adjust the percentages step to 1.2 and the number of lines to 4. Disable the show statistic panel and click OK. This indicator can be used in combination with the other three indicators to identify when a trend is about to reverse and breakout.
Conclusion
By using a combination of technical indicators, traders can maximize their trading success. The Stochastic Heat Map, Pivot Point Upper Trend, and Volume Based Support and Resistance Zones are a potent combination that traders can use to identify potential trading opportunities. Additionally, traders can use the Breakout Probability Expo as a confirmation tool. Remember, each indicator has its strengths and weaknesses. Therefore, it is vital to find the combination that works best for your trading strategy.
