Stage 1 Introduction – Strategy Potential
Here at The Social Traders we trade a strategy compiled of Price Action, Patterns and Smart Money Concepts.
We use Price action and patterns within our strategy to understand where the market is going, the overall direction of price and where the market is most likely to reverse.
When then use Smart Money concepts to hone in on an area of interest, maximise our risk to reward and also remove emotion. This has enabled our members to achieve 6 figure funding through prop firms such as FTMO whilst also having members achieve double digit account growth month after month.
Let’s take a look at how our strategy and edge has evolved to be more rewarding than others. We’ll take a look at an example on GBPCAD
So this was a setup that we looked at in TST PRO, the overall area of interest was honed in on by using our understanding of price action and patterns (although it is not featured in this chart setup as we are sat on the 30 minute timeframe). This setup mainly uses our experience with SMC to locate the most probable area of price reversing, it may look quite confusing now but will make sense as we begin to work our way through the strategy.
This first example shows an entry that is very conceservative, the entry point is placed at the very bottom of the last 30 minute up candle with the trades stop loss placed above. This means that if the trade were to hit its target (down at the 1.74644 region) it would only bank 2.74%. Not to be snubbed as 2.74% is still a good trade and will help you compound your account, however we can do better.
This is an alternative way of entering the market, in this strategy you will learn we can whittle down our entry zones by using the 50% of the last up candle on entry. As you can see our entry area has moved from 1.75459 to 1.75582 – we’re managing to get into the position 12.3 pips higher than the previous move. This also allows us to get into the trade with a much tighter stop loss, which in turn increases the potential risk to reward from 2.74% to 5.93%.
But what if we were to take this a step further?
This is the TST entry model once refined,
I have now dropped down to the 15 minute timeframe to really hone in on price once more. You can now see that instead of the market pushing up to the highs of 1.75700 we now have seen that the last significant up candle ranges from 1.75459 to 1.75640. Again, entry from the 50% of the candle.
This has allowed us to bring our stop loss closer to entry and therefore significantly improving the risk to reward on the trade. The risk to reward has increased from 5.93% to 9.01%.
That means we’re increasing our account capital by 9.01% based on a 1% risk model.
The crazy thing is, this trade has only moved 90 pips!