Quick summary of MOST important rules

5th October 2013, 09:59 PM

Small summary of most important rules, they apply to any timeframe

• Trade only fresh levels when you are in a trending market AND you have enough room to
opposing higher timeframe SD area

• Trade when you have a clear direction on MN and WK, else wait at least to have direction
and momentum on the D1 timeframe

• Use the trendlines to assess the trend on any TF

• A bigger timeframe wins over a lower timeframe most of the times, the exception is exactly
the opposite

• Trade original AND fresh levels at higher timeframes areas if you want to go counter trend

• Do not trade non-fresh levels on Set & Forget

• Always wait for confirmation at non-fresh higher timeframe areas. If used-up, wait for
confirmation with a clear new trend in the opposite direction
Higher timeframe areas are D1, Weekly and Monthly

• Wait for confirmation AND/OR trendline break if the higher timeframe level is not fresh and
not used up (more than 2 retests)

NOTE: sometimes it's not a trendline OR a SD area that needs to be absorbed, but a classic
and obvious support/resistance area. If that you find such an area, wait for it to be taken out

• If a HTF zone is used-up, that is, 2 or more retests, neither trade it on confirmation nor on set
& forget, pass on it

• Trade counter-trend only if there is compression and/or badlyf formed levels to the
left. Check out the counter-trend lesson for more information

• Stop trading if 3 or more 3 CP patterns have been formed in the same direction and there is
over-extension (ERCs off the CP imbalance). By that time, price will be over-extended and
you will be buying/selling after a strong price movement, too high or too low, thus not high
odds

• Use WoW trades as confirmation

• Lower WoW trades against a bigger timeframe area in control or bigger TF WoW trade is not
high odds

CHECKLIST FOR ZONE QUALIFICATION AND TRADABILITY

These are some common factors to consider when choosing levels to trade from are listed below:

Supply and Demand Zone Qualification and Tradability Checklist (Mandatory)

1. 2:1 Imbalance

2. Consolidation away
 3. Removed opposing zone. If opposing zone nested in HTF zone, then HTF zone must be
removed as well. (not required if no opposing zone, or WOW setup and HTF is fresh)

4. If CP zone, TL must be intact.

Tradability Scoring Factors

Positive Factors

1. Is zone fresh? (Mandatory for tradability)

2. Is zone original?

3. Strong departure? (gap best, else 2 or more ERCs with close at or near 80% of range)

4. Room for profit? (3:1 RR on both Entry chart and SD Range)

5. Strong Base? ( Compact Candles- no more than 6, little or no congestion to left of base) I will
color rectangle red if zone has weak base – as alert to ignore zone for entry or as an impedance
in the profit path.

6. Accomplishments? (removing HTF opposing zone, or opposing zone with strong base &
accomplishments)

7. With the trend on HTFs? (Mandatory for now - no counter-trading)

8. Nested in fresh HTF zone?

9. Price closed above opposing zone/other resistance after several retests of zone?

Negating Factors

1. Opposing HTF zone in control?

2. Impedances in profit path? (20 EMA, HTF trend line or EMA, Previous MN/Wk High/Low, Flip
Zone)

3. Has no candle closed above opposing zone, opposing HTF zone, Mn/Wk/or all-time highs?
(This is especially important for CPs)