Earlier, I got a comment that my trading method using the 21EMA structure was difficult to follow, so I'd been thinking about whether I could offer a simpler, more straightforward approach. So I'm going to share my method using the LL-HL structure.
First, I've published an indicator on TV that automatically draws this structure.
https://t.co/CCYbrjGFiA
https://t.co/aZDcm7Uz1t
This time I've released an improved version on the site below, so I'll explain using that indicator. For details, check the posts below.
https://t.co/Lqa3nqVuNt
https://t.co/gwOzsyHw9r
Let's start with the prerequisites🙌
First is RS. I've published the RS indicator below.
https://t.co/lLdJNHTysT
https://t.co/uW2sorplLH
I like stocks with RS21 above 70 and RS63 above 80.
Next, a market cap above 1B and a 50-day average volume above 1M. For volume, it's preferable to have a day within the last 10 sessions that posted the highest volume in 10 days along with a green candle. I call this a PP.
Finally, stocks with ATR% from 50SMA below 5, ideally below 4. Occasionally there are stocks that keep climbing even above 7, but most of them tend to go through a pullback at some point.
https://t.co/twPoMeQbiu
That covers the prerequisites. From here I'll share how to use the indicator. And everything from this point on is determined by the closing price.
First, once the LL-HL structure completes, it's drawn on the chart, and I take a half position at the 1st Pivot. The stop here is the 21EMA Low. Next, the price needs to reach the 2nd Pivot within 5 sessions at the latest, ideally within 3. This is a characteristic of strong stocks. For example, even if the price is still above the 21EMA Low after 10 sessions, if it hasn't reached the 2nd Pivot, I close the position.
Next, after reaching the 2nd Pivot, I add to the position. At that point, the indicator moves the Stop to the 1st Pivot. The 2nd Pivot is an important price line and can act as resistance, so this is to minimize losses in case it drops afterward. It's also most preferable to have a PP occur on the day it reaches the 2nd Pivot.
And once the LL-HL structure is complete, the target points are already drawn automatically as well. These target points tend to act as resistance, so I take partial profits gradually in two stages as the price rises. However, depending on the chart structure, there may not be much room for profit, so my selling method is as follows.
I prioritize taking profit when the gain reaches 25% or more. Otherwise, I place my risk at the 21EMA Low at entry, and when the risk-reward hits 3 or the ATR% from 50SMA reaches 7 or above, I take partial profit on 33% of the position. For the remaining position, I do a final exit when it closes below the 21EMA Low.
One more important point: I prefer clean charts that are properly finding support at the moving averages, like the 10SMA, 20SMA, or 21EMA.
I share the stocks that meet these criteria every day as the Today's Watchlist, where I post stocks that reached the 1st Pivot or 2nd Pivot the previous day, as well as stocks where a PP occurred. I'd be happy if you find it useful.
And if you have any questions, feel free to comment😉
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