The Trading Code by Jason Cam

Chapter 1: PRICE
I. Intro:
a. Most important element in a chart represented by candlesticks
i. Has a body & tail which shows: the high, low, open and close
ii. The difference between the open and the close is the range/body
II. Guidelines
a. Color determines bullishness or bearishness
b. Size of the body determines strength. Longer = More Bullish/Bearish depending
on color
c. Location of the close in the candle sets the interpretation. The closer the close is
to the high, the more bullish it is. (Small upper wick). The closer the close is to
the low, the more bearish it is. (Long upper wick)
d. Momentum/Strong Candles: 2 or more long candles seen during trending moves.
These propel price to a certain direction.
e. Non-momentum/Weak Candles: 2 or more short candles seen during trend
pauses.
III. Trends
a. Trade only on Uptrend
b. Important to identify if price is on UPTREND, Downtrend or Non-Trending
i. Uptrend: higher highs and lows
ii. Downtrend: lower highs and lows
iii. Sideways: non-directional up and down movement creating a range of
highs (resistance) and lows (support). If properly identified, this can also
be profitable.
IV. Waves
a. Typically composed of 5 counts: 3 momentum waves and 2 pullbacks.
b. The Wave Rule of Alternation: if Wave 2 is deep, then Wave 4 is shallow and vice
versa. This can help anticipate the structure of pullbacks. *also applies to
downtrends.
V. Four Stages of Price Action:
a. Accumulation
i. Price stops dropping and reaches rock bottom and people are no longer
interested
ii. Price moves sideways in a range, big funds/instis are buying quietly
b. The Markup
i. Sudden surge of demand leads to a breakout point
ii. Wave counting begins. Pullbacks are bought forming higher lows.
c. Distribution
i. Big funds quietly sell in tranches, with the public buying but price not
going up
ii. Seen as consolidation after an uptrend.
iii. Volatility is higher than stage 1 and market participation is heavy.
 d. Markdown
i. Big funds stop buying, leading to the price free-falling.
ii. Price enters downtrend, forming lower highs and lows.
iii. Instis and big funds start buying as the trend matures.

Chapter 2: SIGNS OF REVERSAL

I. A candlestick or combination of candlesticks that gives a signal or cue that the
prevailing trend is about to end, and about to change direction
II. Very reliable when seen in areas of Support and Resistance, ineffective when seen in
patterns of no momentum.
III. Applications:
a. Timing entries on pullbacks
b. Timing exit when TP is reached
c. Entry and Exit for Range Trading
d. Timing entries for stocks with a downward momentum
e. Timing exits for stocks that are moving with upward momentum
IV. Characteristics of SOR:
a. Position is of utmost importance. SORs at support or resistance levels are very
significant.
b. Form is important. Size of the candle, length of the tail, color of the candle and
the candles’ location relative to one another.
V. Use BULLISH patterns of SOR for entries and BEARISH patterns for exits
a. Look for SOR candle and anticipate confirmation candle after
b. BULLISH SOR: In a downward momentum move, look for a confirmation candle
after SOR. If price trades ABOVE the high of the previous SOR candle and closes
above it, then the bullish reversal is confirmed.
c. BEARISH SOR: In an upward momentum move, if you see a bearish SOR, wait for
confirmation candle. If the price trades BELOW the low of the previous SOR
candle and closes below it, the Bearish SOR is confirmed.
VI. MEMORIZE 1,2,3-Candle Reversal Patterns

Chapter 3: VOLUME
I. Volume confirms your trend ideas and warns you of impending disaster
II. Refers to the amount of shares traded over a time period. Higher volume = more
participants
III. 8 Rules of Volume:
a. In an uptrend, volume should increase as price increases.
i. A low or average volume on an uptrend proves that the move is not
supported
b. In a pullback, volume should decrease as price decreases.
i. A healthy pullback is one with low volume. This signifies that buyers are
holding and only few are selling. Expect a continuation soon. If you see
heavy volume on pullbacks, it means that holders are unloading and the
down move may be a downside momentum move and not a pullback.
 c. In a downtrend, heavy volume validates the trend.
i. Increasing volume confirms downtrends.
d. In a breakout, explosive volume must be present.
i. The sudden upward move must be supported by a large number of
trading participants.
ii. Volume must have at least doubled on the breakout.
e. In a parabolic move, high volume usually results to exhaustion.
i. Parabolic move = extreme uptrend
ii. The big volume is caused by maximum greed and minimum fear. This is
when the public starts getting in, causing high volume. This is where
momentum ENDS because smart money has gained and is getting out.
iii. The combination of parabolic moves and high volume should tell you to
get out.
f. In a steep downtrend, high volume on extreme selling may reveal the final low.
i. This is the reverse of the high vol parabolic move.
ii. A new low accompanied by unusually high volume should give you a hint
that it has hit rock bottom, esp if this happens in an area of support.
g. After an uptrend, heavy volume with little price movement reveals Distribution.
i. When you see heavy volume with no significant price movement, it is a
bearish sign of distribution when institutions are trying to unload their
shares.
h. After a downtrend, heavy volume with little price movement reveals
accumulation

Chapter 4: MOVING AVERAGE

I. Used to monitor trends and identify possible support and resistance areas
a. Average of successive closes over a specified period
II. SMA = Simple Moving Average, EMA = Exponential Moving Average
a. SMA is the sum of closing prices for the specified time period
b. EMA more weight is given to recent closing prices
III. Short term MAs are more sensitive and are very reactive to change in price. Longer
MAs are less reactive and they move smoothly with less fluctuations.
IV. The longer MAs are more significant because they cover a wider historical data
V. Possible MA settings:
a. 200MA: long term, most popular, monitored by large institutions
b. 50MA: trend identifier, determines if stocks are tradeable or not
c. 21MA: short term MA, 21 trading days per month
d. 15 EMA: shortest and most responsive, for short term trading
VI. MAs as Trend Identifier
a. Informs you of what the trend is
b. Focus on the slope or the angle
i. A sloping or angled up 50MA means that the price is in an uptrend, so
you can look for an entry to go long
ii. If it is sloping down, don’t enter the trade
 VII. MAs as Buy and Sell Signal Generator
a. A crossover is simply the point where one MA crosses another MA
i. Whenever a shorter term MA crosses over a longer term MA, it means
price is going up and vice versa
b. Using shorter term MAs gives more buy and sell signals, but more whipsaws also
happen.
VIII. Multiple MAs for Trend Identification
a. If the MAs are entangled, then there is no trend.
b. If the MAs are all perfectly lined and angling up, you have a smooth-flowing
uptrend.
IX. The Death Cross
a. It is a bearish crossover of a short term MA crossing under a longer term MA.
X. The Golden Cross
a. Bullish crossover of the MA50 crossing above MA200
XI. Moving Average as Support and Resistance
a. The more times an MA has been tested, the more significant it is.
b. Think of MAs as magnets to price. The MA always pulls the price closer, so be
cautious in buying when price is too far from the MA.
XII. Best Combination of MAs
a. One each: short, medium, long MA
b. Always use together with Price, Volume and preferred indicators.

Chapter 5: MOVING AVERAGE CONVERGENCE DIVERGENCE (MACD)

I. Most well known and most commonly used indicator, derived from 2 MAs
II. Gives a buy signal when the stock is trending up and a sell signal when it is reversing
III. Lagging indicator: use the delay as an advantage because it makes sure the trend is
already set in place before giving a signal
IV. Often used with RSI or STS to make up for the “lag”
V. MACD Structure
a. MACD Line: solid line that travels above and below zero
i. If MACD is above 0 = bullish
ii. If MACD is below 0 = bearish
iii. If MACD is at 0 = changing directions
b. Signal Line: the smoother-moving dotted line that is used to generate signals
i. If MACD line crosses above signal line = BUY
ii. If MACD line crosses below the signal line = SELL
c. MACD Histogram: used to easily visualize movement
i. Bars above the line = bullish
VI. MACD Settings
a. Settings can be customized. The lower values you assign, the more buy and sell
signals you will get.
b. Pring (65,90,12) generates few signals but most profit. This is best used for major
uptrends and long term trades.
VII. MACD is USELESS in non trending charts. Use RSI and STS for those.
Chapter 6: RELATIVE STRENGTH INDEX (RSI)
I. Measures the speed and magnitude of price movement
II. Single line bouncing between a defined range of 1-100
III. Below 30 = oversold, above 70 = overbought
IV. Best buy signal is a stock that is oversold on the monthly, weekly and daily charts
because of the unanimous signal.
V. When exactly to buy?
a. Stock’s price falls together with RSI
b. RSI falls below 30
c. Price gives a SOR and RSI hooks up
d. Buy on SOR candle (aggressive) or by buying the confirmation candle on the next
day (conservative)
VI. Do NOT use RSI alone as entry or exit criteria. Always confirm with price and look for
SOR.
VII. Use RSI on ranging or sideways stock only. In a downtrending stock, RSI naturally
stays below 30 for a long time, so it is NOT a signal to buy. Same for uptrend stocks
and RSI overbought signals.
VIII. Advanced RSI use:
a. Bearish/Bullish Divergence
i. Bullish Divergence: happens when price makes a lower low but RSI makes
a higher low
ii. Bearish Divergence: happens when price makes a higher high but RSI
makes a lower high.
b. RSI Trendline break
i. You can make trendlines by connecting significant peaks or troughs in the
RSI chart. The same trendline rules in price apply to RSI.
c. RSI Price Patterns
i. It is possible to create price patterns like H&S, triangles, pennants and
wave counts in RSI.

Chapter 7: STOCHASTICS (STS)

I. Stochastics (STS) is a momentum indicator. It shows when a stock is getting
overbought/oversold
II. It warns of impending changes in the price direction.
III. STS Structure:
a. Bound indicator from 0-100.
b. Region above 80 = overbought and price is expected to go down
c. Region below 20 = oversold and price is expected to go recover
IV. In (up or down)trending stocks, a price can be overbought/oversold and stay
overbought/oversold for an extended period. This should be regarded as a sign
of sustained buying/selling pressure, not of trend reversal.
V. STS is most useful in ranging or sideways price movement more than in trending
stocks.
VI. Basic STS use
 a. When STS reaches overbought territory, a buy opportunity is prompted.
However, the Buy signal is triggered only when %K line crosses above %D line
b. When STS reaches oversold territory, a sell opportunity is prompted.
However, the Sell signal is triggered only when %K line crosses below %D line
VII. Do NOT use STS signals by themselves. Always consider price
movement/candlestick formations as primary criteria.
VIII. Advanced STS use:
a. Divergence: same with RSI
i. Because STS is known as a leading indicator, it can best be used in
divergences.
b. Extremes: extreme signals are cues for impending reversal.
i. Combine them with prices patterns and SOR and you get high
probability entries and exits.
c. Hinges: flattening of the STS right after a directional move
i. Signify a change in trend or weakening of the current trend

Chapter 8: DIRECTIONAL MOVEMENT INDEX (DMI)/AVERAGE DIRECTIONAL INDEX (ADX)

I. Tells you if a stock is trending or not
a. If ADX goes above 30 = stock is trending
II. However, the ADX does not tell you if it is trending up or down
III. How to use ADX effectively:
a. Validate the trendiness of price movement. Assess the status of the stock by
looking at price movement (higher highs and lows) and checking the 50MA slope
b. Identify trends so you can buy on pullbacks
c. A trending DMI reminds you to:
i. If ADX>30 = use trend following signals of MA and MACD
ii. If ADX<30 = RSI and STS
d. ADX alone is enough to determine if a stock is trending or not, the determine the
trend by looking at the charts.

Chapter 9: TRENDLINES
I. How to Plot:
a. In uptrends, connect two successive lows then extend.
b. In downtrends, connect two successive highs then extend.
c. In sideways movement, connect the highs and lows to identify S&R
II. Better to use tails instead of bodies when plotting because the highs and lows are
significant points in candlesticks.
III. Trendlines are not static. You must adjust the position and angle as needed.
IV. Basic Trendline Use
a. Trendline Violation: a break in the trendline means that the prevailing trend is
over.
b. Support and Resistance: Usually used to plot possible SOR areas
V. Ghostlines: very long trendlines coming from historical price movements.
a. These are NOT used to validate trends, only as support and resistance
Chapter 10: CHANNEL LINES
I. Channel lines are enhancements to trendlines wherein another line is placed parallel
to a trendline, this creating a channel or path where price is expected to bounce up
and down.
II. Price stays confined in the channel until the trend changes and the channel is broken
III. How to plot Channel Lines:
a. In uptrends, connect consecutive lows then place a parallel line connecting
consecutive highs
b. In downtrends, connect consecutive highs then place a parallel line connecting
consecutive lows
c. In sideways movement, connect lows to form the support then connect the highs
IV. A midline or middle channel line is usually placed in the middle to indicate a buy are
for the lower part of the channel, and a sell area on the upper part.
V. This strategy is best used for uptrends and sideways trends
VI. In drawing trendlines, it is okay for some candles or tails to protrude as long as the
channel line still make a good representation of the trend.

Chapter 11: FIBONACCI RETRACEMENT LEVELS

I. Based on the principle that after price moves in one direction, it will soon retrace a
certain portion before continuing the move. Fib retracement levels give you areas
where price is most likely to find support
II. Combine Fibs with SOR to find the best areas for bounces and thus, entry
III. This also applies to down moves. Fib levels provide resistance.
IV. How to Plot:
a. Use Fib Retracement tool and connect major peaks to major troughs
b. Include candles’ tails (not just body) to include extreme moves in price
c. Abnormal or very long tails are disregarded
V. The greater the time frame, the more significant it is and the more time frames
coincide with the Fib reading, the more significant it is

Chapter 12: SUPPORT AND RESISTANCE (SAR)

I. SAR Principle: Buy Support and Sell Resistance
a. Support is an area where people buy. In this area, there is an ample demand
where selling is easily absorbed by eager buyers.
b. Resistance is where people sell. It is an area where buying is met with an
overwhelming supply. As a result, price cannot get any higher.
II. Price patterns give away the location of buyers and sellers in the map.
III. It is often hard to follow the “SAR Principle” because buying on support means the
price at the time was low and depressed. Novice traders see this as a weakness
instead of bargain.
IV. Rules of Support and Resistance
a. SARs are areas and not exact numbers
b. When broken, resistance becomes support and support becomes resistance.
c. The more times a S/R line holds, the more significant it becomes.
 d. The more significant the line is, the more explosive the resulting move is when
broken.
e. SARs are decisively broken by slow, steady moves compared to steep, fast
moves. Resistance is more likely to hold when tested by sharp rallies and expect
a support to hold when tested by a steep declining candle.
f. The higher the volume at the support and resistance area, the more significant it
is and will likely be an area of support or resistance again in the future.
g. Support and resistance areas are places where price is most likely to reverse thus
providing good entry and exit opportunities.
V. SAR List:
a. Whole and half numbers
b. Previous high, previous low, previous consolidation
c. Moving averages, trendlines, channel lines
d. Fibonacci areas
VI. Combining SAR and SOR Principles gives you the ability to anticipate a U-turn in
prices. This can be used in entries and exits, as well as plotting Target Price and Stop
Loss points.

CORE TRADING TECHNIQUES: Trading Breakouts and Trading Pullbacks

Be selective in your trades. Enter a trade only when you see the proper setup. This will help you
be more selective of the trades you enter and preserve your capital.

Chapter 13: TRADING BREAKOUTS

I. Breakouts are momentum moves to the upside. They are supposed to be explosive
and mark the start of a major price trend.
II. Consolidation: this is the stage when a stock’s price stays inside the area of support
and resistance while pressure builds up. This fuels an explosive breakout.
III. Looking for a setup:
a. In searching for a consolidation setup, look for price movement that is moving
along a defined support and resistance level
b. Price usually stays inside a range and a horizontal or triangular channel is
formed.
c. The breaking of this upper boundary (resistance) is called the BREAKOUT.
IV. Volume Spikes confirm breakouts. It signifies that the breakout has enough
participants and is therefore valid. It also shows public interest on the stock.
*Volume spike should at least be double of average daily volume.
a. Expect low volume in times of consolidation before the breakout. Look for a
prior dry up in volume during consolidation, then a sudden volume spike on the
day of the breakout.
V. Longest Range in the Past 10 Days
a. The higher the value of the range, the longest is the resulting candle. The
breakout candle has to be relatively longer compared to the ones found in
consolidation.
VI. New 2-Month Price High
 a. This increases the reliability of the breakout but is not a necessary component to
have a successful breakout. The longer the time frame, the more explosive the
BO
VII. Price Closes above the Upper 50% of the Day’s Range or Better
a. A candle that closes at or near the high of the daily range is always preferable.
b. A stock closing below 50% of the daily range shows that the interest on the stock
on the day of the breakout did not last until the close and may show skepticism.
VIII. Checklist
Primary Criteria:
 Prior Consolidation
 Breakout of Resistance of the Consolidation
 Volume Spike
Secondary Criteria:
 Longest range in the past 10 trading days
 New 2-month price high
 Price closed above 50% of the day’s range or better
IX. Unusual volume spikes with no price movement should be monitored. These are
hints of a possible momentum move in the near future.
X. Breakout Entry
a. Best entry is 2 or 3 fluctuations above the breakout point. Ex. for P1.00, best is
P1.02 or P1.03
b. However the whole BO candle is a good entry point since you are expecting that
it is just the start of a new uptrend.
c. NEVER buy at .99 in anticipation of the breakout. Wait for resistance to be
broken because there is still no proof at that point that a BO will occur. Buying at
.95-99 is actually dangerous because there is a chance that the resistance will
hold and the price goes back to support.
XI. Breakout Exit
a. Stop Loss 1: placed 2 tics below the breakout candle (tight/conservative)
i. A BO is supposed to propel the price higher, and the previous resistance
should already be acting as support.
b. Stop Loss 2: placed below the entire consolidation pattern (wider/liberal)
i. Done only when you think the BO can still happen.
ii. When the lower trendline is broken, it tells you that the BO is really a
failure.
XII. Target Price: placed in areas of resistance where price has a high probability of
stalling or reversing.

Chapter 14: TRADING PULLBACKS

I. Pullback: a rest from the uptrend or a temporary weakness after an upward
momentum
II. Your task is to look for a good entry on the uptrend through the pullback. There is no
use buying if the uptrend is not present.
III. Classic Pullback: uniform series of candlesticks that is arranged almost successively
below each other that they look like a staircase going down. The end of a classic
pullback is usually a prominent SOR and is easy to spot for an entry.
IV. Flag Pullback: a tight consolidation of candles after a momentum move. Price usually
doesn’t move down drastically, which signifies controlled profit taking. Flags don’t
usually end in an SOR so the entry is marked by the BO of the flag consolidation
*Flag: Pennant, Wedge, Banner, Streamer, Bandera
V. Pullback Entry and Stop Loss
a. A good, calculated pullback entry allows you to sit back and trust your trading
plan. A haphazard entry will affect your decision-making when the pullback goes
a little too low, prompting you to quit a profitable position.
b. Classic Pullback: SOR prompts you of a possible reversal. The exact entry point is
the confirmation candle the next day after the SOR. Enter a few ticks about the
SOR candle’s high. The stop loss is below the low of the SOR.
c. Flag Pullback: Entry is on the breakout of the flag consolidation (resistance)
together with a surge in volume. The stop loss can be set either below the low of
the breakout candle or below the low of the entire consolidation.
i. Always draw channel lines to define flag boundaries.
VI. Pullback First Resistance and Target Price
a. After entry in a pullback trade, the first resistance you will encounter is the high
of the previous rally. If price breaks through it, then it is most likely to proceed
with the uptrend.
b. 5 Criteria to Consider
i. General Uptrend: Price must be starting a new uptrend or already in a
prevailing uptrend. The younger the trend, the better.
ii. The Pullback: flags and pullbacks are continuation patterns so expect the
trend to resume
iii. Volume: must dry up in volume. The decline in volume is a sign of a
healthy uptrend.
iv. Support: it is best to buy on pullbacks that are in areas of support just
before it continues its uptrend
v. Entry On:
- For Classic Pullback: SOR on an area of support
- For Flag: BO of Consolidation. Wait for the Breakout from the Flag, not
before.
VII. Pullback Setup Checklist
a. General Uptrend
i. Prior Breakout
ii. 50MA angled up
iii. ADX>30
b. Pullback
i. Classic
ii. Flag
c. Volume
 i. Decreased volume during pullback
d. Support
i. Previous high, low, consolidation
ii. MA
iii. Trendline
iv. Fibonacci
e. Entry Signal
i. Sign of Reversal (SOR)
ii. Breakout of Consolidation (BO)
VIII. The Golden Pullback
a. The first pullback after a breakout
b. Freshest entry into a building trend
c. Considered an alternative to buying breakouts
d. Use the BreakCheck to spot a valid breakout then wait for a pullback for a
possible entry.
IX. The Golden Flag
a. First flag formation after the BO
b. Some breakouts are so strong they don’t dip low enough to touch the previous
BO point. Instead it makes a short and controlled flag formation before it
continues its uptrend.

Chapter 15: SAR-SOR TRADING (NO)

Chapter 16: DECODING POPULAR PATTERNS

Chapter 17: STOP LOSS

I. Stop Loss: a point where you are going to decide to cut your losses short before they
wipe out your entire account. It saves you money and preserves your capital.
II. Cutting losses is a natural part of trading and not a failure or an error in trading.
III. Rules in Placing a Stop Loss:
a. Respect your stop loss.
b. Determine your stop loss even before you enter a trade.
c. The closer your stop loss is to the entry point, the better.
d. Use the same time frame in setting entry and stop loss points.
e. Place your stop loss at a point which when hit: breaks the pattern, breaks
support or invalidates the setup.
IV. A normal breakout should have follow through in the form of successive bullish
candles or possible a flag formation. A false breakout means that the people used
the “breakout” to liquidate their shares and is not supported.
V. Pivot low: marks the pullback or temporary weakness during the uptrend, and
provides a good cue for entry
a. Price trading and closing below the pivot point is a warning that there is
something wrong.
VI. The lows of a range is an established support level. Once it is broken, it implies that
the buyers supporting that level have disappeared and may trigger a downtrend.
 VII. A trendline break implies a change in trend. If you were expecting an uptrend and it
breaks, you must get out if the uptrend no longer exists.
VIII. Stop Loss Placement
a. Use chart patterns and candlesticks to determine your stop loss points
b. Stop loss is placed 2-3 ticks below the low of the reference candle. Others use 3-
5 ticks or 5-10 ticks.
IX. Whipsaws
a. Fakeouts: false breakouts; may cause you to buy on breakout only to be
whipsawed when price falls back
b. Shakeouts: may cause you to sell because of an accidental stop loss trigger
c. Whipsaws are normal phenomena in trading and you shouldn’t be mad or
disappointed when you get shaken or faked out. In shakeouts, re-enter when
you feel like the trend is still intact. In fakeouts, sell the position you bought for
minimal loss, then move on.
X. The key to combating whipsaw lies in the observation of the price movement after it
has occurred. Confirm if the trend is still intact and plan your trade.
The usual mistake of novice traders is that they abandon the stock after they’ve
been shaken out.

TARGET PRICE
I. Rules in Determining the TP
a. Determine the TP before you enter a trade.
b. The farther the TP is from the entry point, the better.
c. Use the same timeframe for entries, stop loss and TP.
d. The TP should be at a resistance area.
II. It is wise to sell in tranches or in parts so as to keep profits running. Sell 50/20/30 or
50/20/20/10 every time your TP is hit to lock in profit.

RISK/REWARD RATIO
I. The distance between the Entry price and the Stop loss point (risk) over the distance
between the Target Price and the Entry Price (reward)
Example:
RRR = (TP - Entry)/(Entry – Stop Loss)
TP = P28
Entry = 26.15
Stop Loss = 25.30
= 1 : 2.18
A ratio of at least 1 : 2 is acceptable.

TRADE ASSESSMENT
Is there a high probability pattern? (Yes)
Is there an entry? (Yes)
Is the RRR at least 1 :2? (Yes)
Take the trade!
Chapter 18: TRAILING STOPS
I. Trailing Stops are stop loss points that have been adjusted UP to follow price
movement. These are used to protect profits when price starts moving in their favor.
II. Two ways to set trailing stops:
a. Per Candle (tight trail): adjusted for each new candle; placed below the previous
candle’s low
b. Per Pivot (loose trail): stops are placed below pivot lows
III. Both methods can be used. The Loose trail stops can be used so that you don’t get
stopped out prematurely from a trade. But as the trend matures and you feel signs
of weakening of the trend, a tighter trail stop must be followed.
IV. Some people use Moving Averages or Trendlines as trail stops. When the pattern is
broken, they exit the trade.

Chapter 19: RISK MANAGEMENT

I. Set your capital.
II. Set the percentage that you can risk per trade from 1-3% of capital.
III. Determine your entry price and stop loss price.
IV. Divide the risk per trade by the risk. You now have the number of shares you can buy
that only risks 1-3% of your capital.

Chapter 20: TRADING SYSTEM

I. A trading system must have:
a. Set-up (Patterns): NO Setup (BO/Pullback), NO trade!
b. Entry: All 5 must be determined:
i. Entry price
ii. TP
iii. Stop Loss
iv. RRR
v. Type of Entry Order
c. Exit
i. Exiting at TP
ii. Exiting using Trailing Stops
iii. Exiting at Break Even
iv. Exiting at Stop Loss
II. The key to successful trading is consistent execution of a good trading system. Any
simple and logical system based on basic technical analysis will do as long as you
execute the plan accordingly.