December 27, 2015

F2G Trading Strategy

Please read the disclaimer below, thank you!

F2G Trading Strategy - Are you the House or the Gambler?
The House may lose 45% of the time give or take in Vegas, but they always win in the long run.

What to buy (volatile and liquid)
When to buy (partial first entry, full position second entry, or no trade if chart isn't clear)
When to sell (half position at 1R/2R, rest at major support or resistance, washout/spike, or trend reversal)

What to buy
Can trade ANY volatile and liquid security, commodity, or forex (futures preferred due to tax and commission benefits, forex and ETFs are a good alternative)
Something with a clear chart pattern and trade thesis, if not, avoid like the plague

When to buy
Initial partial buy at major support or resistance (major = several tests) or
Initial partial buy at BOPB after successful BO or (see BOPB and BO definitions below)
Initial partial sell after failed BO and failed BOPB
Add in full position at BOPB LH/HL (lower high, higher low)

When to sell
At stop that proves trade thesis wrong/price does something it shouldn't have
Half position at 1R or 2R, begin to trail stop
Rest at major support or resistance or
Rest at washout or spike or
Rest at trend reversal

Trade when you have a statistical edge, i.e. when you are the House in a trade, not the gambler
You have a statistical edge at major support because institutions are buying and price rises more often than falls at support
You have a statistical edge at major resistance because institutions are selling and price falls more often than rises at resistance
The more times the price tests a support or resistance level, the more important/major that level is
Prior resistance becomes support
Prior support becomes resistance
When the price goes beyond support or resistance, that's called a breakout (BO)
When the price breaks outs then pulls back to the BO price, that's called a breakout pullback (BOPB)
1R = 1 x risk, 2R = 2 x risk, e.g. 1R with 50 cent risk = 50 cent profit target, etc.

If you have any questions or comments, leave them in the comments section below and I'll get back to you as soon as I can.

Disclaimer: I'm now a licensed financial representative (Series 7 and 63) but what I discuss in these posts is NOT ADVICE nor a recommendation to trade, buy or sell any security. This post is about what I believe about the markets and how I trade and this blog is for information and trading journal purposes only. Continued reading of this and ANY of my posts constitutes your acknowledgement of and adherence to this disclaimer. Thanks for your understanding.

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