This is basically one of my daytrading systems. I called it sentiment trading because the direction is being determined by fundamentals and the timing is determined through S&R and pivots. No indicators except 20 & 55 MVAs which was originally not part of the system but I put it in anyway.
In my trading I follow the STF formula. It means Setup-Trigger-Followthrough. First there should be a set up. It could be anything like trendline bounce, MVA bounce, triangle formation,etc,etc. The trigger should be a price confirmation, an indicator signal etc. The follow through is a method of managing the trade. Even if your trade is negative it still has to be managed.
To show you how it works heres my sentiment trading method:
BTW, I only use this on the GBPUSD.
Yesterday, the UK CPI came out and it turns out that it was GBP favorable. Needless to say, the GBP was the best performing currency yesterday against the USD and the JPY. Usually as long as the good news is not thwarted, the sentiment tends to roll over the next day which means that the GBP could go up again today. But, as the retail sales for UK is about to come out the movement of the GBP is uncertain. It could fall or it could rise.
The charts however shows an overbought GBP as it has already reached the R2 of the pivots but it is now testing the 20 mva and it is above the pivot line (gray line). So the bias is BUY. So this is now the setup. Are we going to buy now? Not yet. We have to detemine the trigger.
The trigger is usually the point where the BIAS becomes high probability so in my opinion this should be the 1.6580 level(yellow dotted line). If the price close above that line. We'll put in our buy entry.
The follow through as I have said is Open Trade management. It includes your exit strategy and precautionary strategy in case the trade goes against you. For this setup my TP1 is the nearest pivot level which is R1 and TP2 is R2. Stops is 10 pips below 1.65. Note that I always enter 2 or more lots. If TP1 is hit I exit half of the entered lot and let the rest ride the trend until it reaches the TP2 or exit before the UK session ends. Whichever comes first.
Should the price settle below 1.65 the setup is cancelled. A new one should be created for the counter trade if there is any.
Topic: Sentiment trading (Read 473 times)
