CHAPTER 5. TRADING RULES

Finally you are now on the top of this material. PustakaForex.com Congratulation anyway .In this chapter 5, We are going to discuss about how to set the entry. We will involve Support and resistance, Pinbar and Engulfing, and Confirmation/validation. Well, below are what we are going to do in the trading rules;

1. Draw Strong Support and Resistance

2. Find Pinbar or Engulfing near the support resistance

3. Validating the Pinbar

4. Execution.

No more theory, Lets practice!!!!

Example 1.

In this time I would like to give you an example, how I trade GBPUSD (Step by step Explanation)

Step 1. Drawing strong Support and Resistance

Note: In determining Strong SnR, I always prioritize to use Daily TF and above. But in this case, I use Daily TF. The blue lines are considered as strong Resistance, while the red lines are considered as Strong Support. 

After completing drawing SnR lines in Daily TF then I move down to the lower TF (H4 time frame) to see the candle pattern happen around the SnR.

We open a position when we see "Valid" Candle Formation in the SnR area. From the picture above, we can see that there are some "Valid" candle pattern and 1 "Invalid" candle Pattern (Have a look at the box sign). So let's just ignore the invalid and take only the Valid ones. 

OPEN POSITION RULES

Let's back to the picture above, from the left we have price in Support area. and there is a valid pinbar. So we can take Buy.

Case 1. Pinbar Setup (Buy Position) in Support Area

Case 2. Engulfing Setup (Sell Position) in Resistance Area

Case 3. Pinbar Setup (Buy Position) in Support Area

How to put Stoploss and Take Profit?

1. For setting an SL it is very simple. Just put below/above the candle pattern. You keep in mind that in placing a Stop Loss you must give several pips (Space) below/above the candle pattern. It is intended to anticipate Spread.

2. For determining the Take Profit (TP) it is very simple too. Just Make sure that your TP "AT LEAST" 2X bigger than your SL.

Note: There is no "Perfect" Trading system. What we should know and find is a system which has high winning probability. 

That's all about trading rules. I hope my explanation is clear and easy to understand. If you have a question, I am always there in Facebook Group.

Happy Profit

Cheers,

Kenny FX