Jhx wrote:Thanks for the answer Lem.
I setup my M1 chart (on the USSPX500) and watched it for a few hours this morning, and I noticed it bounce off the EMA and/or the cloud often. Not sure if that's what I should be looking at. For example in some of your charts I see price bouncing off those as well, but sometimes I see the EMA crossing the cloud in both ways making somewhat clean moves.
If the entry criteria is price being above / below the EMA and the cloud:
I'm not entirely sure if there's a 'right' way to enter and approach it though. Do you use different entry methods? Do you trade the bounce or the 'flip' to the other side?
Unrelated side note, there's usually not many methods that use the M1 charts. I can watch at the M1 all day because it keeps me focused and I can see it move tick by tick (something that I can't seem to do with higher timeframes).
There is a basic sequence of events leading to an entry. How far into that sequence you go will determine how aggressive your entry will be.
At the heart of it, is that mantra that Price Above Cloud, go Long...Price Below Cloud, go Short.
This can be blurred by the extremely
aggressive entry that comes as price is rising into the cloud. Not when the cloud is still directional but when it has indicated a turn (colour change and angle). This is dangerous territory though and can bite you on the ass. I really wouldn't recommend it, certainly without any other confirmation.
I will very rarely take the first break through the cloud, instead then moving on to the usual suspects of pa.
This will usually involve a pullback to the ma. Occasionally, price will travel past the ma and turn instead at the cloud itself. The farther the ma from the cloud at the time, the more likelihood it'll bounce off the ma.
If you go in at the ma on a standard candle (not a rejection), then be prepared for it to keep on going for a while. Your Dead Man Stop is generally the other side of the cloud, so should you wish to fade the move back, then feel free to fill y'er boots, if you are comfortable using that technique. There would also be the option to Counter Trade if that is more your thing.
If you do
take a price as you get the move through and out the other side of the cloud, then should you get the usual pullback, that is also an opportunity to hedge that move back, then add-in as it turns back in the original direction. However, this is more a technique to use on the higher time frames imo.
I'll continue this conversation into the next answer to Leo.