I would like to show you a good example explaining why we should use pending orders for entry the markets above/below important zones. Several days ago I wrote about possible trading opportunity for Ethereum Classic. You can find this post in related ideas. I wrote that the price bounced from the resistance zone which was formed by SMA100, the downtrend line and 11.00 resistance level. We got a new swing high as an important level for placing pending orders for buy. And now we can see that this idea was right. Buy orders allowed us to entry this market on time. You could miss this trading opportunity just trying to get the better level for entry and more solid signals for buying. The price reversed and moved upward very quickly. The 1st profit target was reached and we made some profit. If you can't monitor the markets 24/7, using pending orders and important zones is a good way out for catching price movements on time. How to do it correctly? If we have bearish markets like in this example, we should place buy orders above the local swing highs, downtrend lines, resistance levels. If we have bullish markets, we should place pending orders for sell below the local swing lows, uptrend lines, support levels. When the price breaks such zones, we should expect for strong price movements in the direction of breakouts. It's good strategy for entry and you can use it on any markets and time frames. Just don't forget about proper money management and you will be in profit in long run.
how many candles do u observe for local highs and lows? thanks
bruma
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Excellent explanation, I learn a lot from your trades and trade captions :) thanks a lot.
But have question about mentioned idea tradingview.com/chart/ETCUSDT/0GMrvUhj-Ethereum-Classic-Entry-Level/, you wrote "Stop orders must be below the local swing low at 9.80 level.", if we look price history, price went below 9.80, wouldn't that trade be stopped before brakes above 11.20?
About proper money management means no more that 5% of funds?
Thanks
SleeperWoof
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@bruma, When the price hit 9.8, the sell-stop order did not exist. He did not advise to open a position at the time of his post. Instead he recommended placing a PENDING (conditional) buy order which only executes if the price goes ABOVE the recent local high (around 11.1). He said buy at 11.2 - a fraction HIGHER than the local high. The price was at 10.82 when he posted, so you may think "I won't wait for 11.2 because it's cheaper to just buy it now." You would be stopped out at 9.8 with a losing trade, and to add insult to injury you would watch it bounce off 9.78 and go to infinity (or 12, but it feels the same).
That is the entire point he is making with this post. Instead of saying "I'll just buy it now," if you placed a conditional buy order at 11.2, it is a completely different story and a winning trade. That buy order would have sat pending for FOUR DAYS until the price blasted past 11.2. You still need the stop loss at 9.8 in case this was a head fake and it fell back down after hitting say 11.4.
Excellent recommendation as usual, your analysis are clean and great. Could you explain a little bit more what do you mean with -3.83% when you say “we should place buy orders above the local -3.83% swing highs, downtrend lines, resistance levels”
ChanceTrade
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I have made profits based on your analysis, but market movement sometimes changes unpredictably.
what exchanges allow us to buy on upwards price movement, instead of buying at a price regardless of direction?
TomBrazil
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@ChanceTrade, Bitfinex has a trailing stop order, you can set a price diference for a stop buy for instance, supposedly, USD 1 for ETC, when currency starts to go up for a difference of USD 1 it will place the order. Other than that, usually when you set a limit order above the ticker, the movement will be up...
TomBrazil
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@TomBrazil, Just correcting last sentence, stop buy above the ticker.
TomBrazil
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I have followed your ETC hint with great success. Please keep on posting, I do appreciate your strategy to buy over the resistance line, it's always a good bet. Not sure why TradingView autofills a quote every time you write "local", I believe this is confusing to some people. I'm also not sure what you mean by "local". THanx
DLavrov
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@TomBrazil, Thanks! As for yor question "local" = "the previous"