The Three Keys

This is the 2008 continuation saga from the free system forum.

http://www.trade2win.com/boards/free...ge-system.html

The first post on this will be links to the research documents and sources for this method.

Don't worry its a light read (and still being worked on so check back for updates to this post)

I am of the firm belief that if you have an understanding of the historical principles that lay behind this method it may be easier to see where I'm trying to go with this with the most simple, easy method of entering a trade I can devise to date.


The First Key

This is founded on the principle of tight stops and a trade that will fly in your favour from the off.

The Second Key

This is founded on the principle of the bouncing ball or how to find the point where momentum stalls and falls back before bouncing up again.

The Third Key
This is the trigger, no method will work well without a specific trigger to get you in a trade at the precise point that will alow the elements of key one and key two to come to together in a seamless entity.

First we will set a chart up so you can see what's going on

1. Open an hour chart of FTSE

2. Set a 5 period simple moving average and set colour to blue

3. Set a 5 period simple moving average and set colour to red dotted move this average to a vertical shift of +0.05%

4. repeat 3 with a -0.05% vertical shift

thats the chart set

Stops are tight if the trade doesn't go our way from the off it is scratched straight away. close to zero as is possible if the trade doesn't run our way from the outset it will be real easy to spot if the trade is not right ...stop it out.

Some platforms allow naked no compulsory stops eg compulsory and IG (so they say ?)

Some have compulsory auto set stops like capital spreads

you will have plenty of time to set your stop away from the action this is recommended in case the platform goes down and is highly recommended as a disaster stop min distance away as allowed by the platform.

your main stop is is your mouse ...if in doubt stop it out!

Here's an example trade made on the FTSE it shows two examples of trade entry with tis method

The Chart FTSE 2/1/2008

market and participants show their hand

7.00am bar breaks to the upside signalling a long

8.00 am bar opens in the bottom of the band zone, this looks good for a position long you read off the upper dotted line in this instance its 6434 this is participants as an order and we wait for the price to come to us and weare triggered long ...pow we are i a good trade.

the next example was done in realtime on the capital spreads demo!

14.00 pm bar looks bullish we haven't close below the 5 sma since the long from this morning.

15.00 pm price is diving the 5 sma turnes over, price reaches the sma and stalls momentarily at equilibrium giving you plenty of time to read off the short (lower band) and enter the order into the trading platform in this instance you would have entered 6485 as the point to go short, aftera bit more sideways movement ...pow down it goes triggering you into the trade that is from the off a good un.

Capital Spreads is pleased to confirm that a demonstration order has
been successfully created:

Sell 10 of FTSE 100 Rolling Daily at 6485 goodtil Cancelled (Order id
1577084)

Capital Spreads is pleased to confirm that the following demonstration
trade was successfully executed:

Account # : 6648
Ticket # : 2152822
Market Name : FTSE 100 Rolling Daily
Stake : 10 ?
Action : Buy
Price : 6444
Market Expiry : 16 Feb 2015 16:30
Trade Executed : 2 Jan 2008 15:28

Interesting. Never knew you could do that with MAs.