Many people look high and low for the Holy Grail. I knew long ago that it doesn't exist.
I come from the Trading Floor where I saw many professional traders each has a "collection of set-ups".
A pre-defined set-up presents itself when a particular market condition plays out, and when that happens, it is telling you the likelihood of what the market would do next.
Having learned and collected multiple set-ups would give you the necessary trading edge, to take money out of the market.
Over time, trading these set-ups would also give you a good understanding of market structure, therefore giving you more consistency over your profits.
To explain what I've just said, I will share one set-up with you, one that happened this week to TAIWAN market, ultimately bringing her to close today (Thursday 06 AUG) at a seventeen months low.
It is called TY-BRG, which stands for Break, Retest, GO !!!
There is, however, a prerequisite to TY-BRG ...
You must have first identified a S/R line (support/resistance level)
Using TW as our example, I have identified 3196 to be the S/R support level, that was tested twice, on 29 & 31 JUL.
There is another prerequisite, that you have decent knowledge on Price Action with Candlesticks.
At the end of 31 JUL, TW found support at 3196, but also ended the day with a Shooting Star at MAP.
The market started the month (03 AUG, Mon) by breaking my S/R line (on the downside). Sellers sold the market down in 3 candles (45min), losing 2% from her previous day close. This is the first part of BRG --> the Break
After the 45min drop, the market drfited in a tight range to end the day. I posted this on my FaceBook to prepare for this set-up.
Just in case the words on the chart is not clear, I'll repeat it here:
"TW broke this double bottom low today, making new year low Take note of price action, when retest 96"
On Tuesday, market opened and traded up to 3196.
This is the 2nd part of my BRG --> Retest
The Retest action ended with a Shooting Star (SS), at level 3196, which is a bearish sell signal (you would know this if you know Candlesticks)
When the SS is triggered, the market started dropping, all the way to the previous day's low ...
This would be the 3rd part of my BRG --> GO !!!
And this is the part that is PAYING YOU the $$$, when after retesting a Support, that has turned Resistance.
Tuesday's market ended her day low with a Hammer (the opposite of SS), therefore created a new lower double bottom.
Wednesday's market was fighting between the 2 levels.
This morning (Thursday), market traded up to test 96 AGAIN !!!
What happened next was a Bearish Engulfing (another bearish candle signal).
Market proceed to Break 3150, traded lower and closed at a 17 months low.
I hope I have given you some idea as to what a set-up means, at the same time introducing my TY-BRG to you.
At the end of the day, this is what professional traders repeatedly do, looking for set-ups with the edge, and just keep doing it.
Of course, it is always nice to have ADDITIONAL EDGE.
If you can see the colors of the candles in my chart, that is how it gave me further confirmation, together with candle signals, regarding market strength and weakness, therefore further enhancing my trading edge.
Go and read more about my season colors, so that this edge can also be yours.
***This article is written on 06AUG, Thursday night.
Consider my TY-BRG a SG50 gift.
Happy Birthday Singapore, Happy Birthday to ALL :)