Octopus Day Trading Method

[suri112000]

To profit in Intraday method, we need a robust system which generates a high probability setup or trading signals and avoids trading in sideways moves.

Take any method or indicator, you will have a number of signals but it does not hold you back in sideways moves.

We need a system which does both. Hence, this thread.

The method is named after Octopus since the chart is loaded with tentacles to lock in sideways moves.

Requirements

1. KPL Swing Indicator with setting 5 periods.
2. 2 minutes realtime data feed.

Instruments to trade

1. We will use Nifty futures to understand the method.
2. Later with practice can be used on any highly liquid futures.

Enormous Practice is required since it is traded in 2 min timeframe.

 

[suri112000]

Here is the snapshot which differentiates between raw signals and octopus method.

 

[CuriousInvestor]

Looks interesting. Looking forward to more details.

 

[chavanms]

Please elaborate more

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[timepass]

This is the first time I heard of KPL swing indicator. Googled it and found this.

http://www.vfmdirect.com/kplswing/

Basically it seems to buy/sell above/below the high/lows of n periods. So, considering n to be 5 in this case, and 2 minutes TF, does the system basically boil down to buy/sell above/below 10 min candles ? (for those who don't have KPL in their software). I guess the indicator would work as TSL.

 

[rpjiodhaked]

Looks interesting

Sent from my Moto G (4) using Tapatalk

 

[suri112000]

Day Trading becomes easy when you trade along the momentum. KPL Swing is basically breakout indicator. Whenever it breaks support or resistance it flips earlier signal. We need to trade when the price action confirms a valid breakout. There are lot of theories about breakout confirmations. Many of them are valid. But when price is stuck between support or resistance, it is obvious for the price to pull us into trade and get us stopped out in a whisker. To be a successful day trader, we need to learn the tactic of avoiding the signals in sideways moves ie when the price moves are stuck between support and resistance.
Octopus also facilitates trades between support and resistance.

But I am concentrating only on breakouts as far as this method is concerned. In addition to KPL breakout, a little bit knowledge of Candlesticks pattern is also required to grasp this method. You should be fast enough to type the orders.

If anybody is a beginner or novice, please avoid this method until you become conversant with the basics.

 

[suri112000]

I will explain this method in two phases.
First is when to initiate the trade when the signal comes, stop loss and profit target.
Second is to judge whether the signal is valid.

The method is to be applied when both the phases are validated.

So, donot be in hurry to trade the method.

First phase.

1. When KPL Swing is in buy mode :-
Check whether the first candle is green or not.
If it is green, wait for a red candle to form.
No matter how many red candles are formed in sequence util KPL Swing flips to sell mode.
Now, look for a green candle which closes above the recent red candle.
If green candle does not close above recent red candle, look for another green candle which closes above, the previous green candle.
If these conditions are satisfied, we have a buy set up.

sell mode is the reverse of the above.

We will see some examples to understand this pattern.

 

[suri112000]

We run some more examples to understand it better.

 

[PUCHU_2500]