"Perfect Entry" Strategy using Stochastic Oscillator + 200 Simple Moving Average - CryptoAcademy - Dynamic Beginner Course - S5W3 Homework post for @lenonmc21

The Perfect Entry Strategy is a well organized plan mapped out by traders in order to generate a competent signal for placing a trade that will lead to maximum profit from the Crypto market. It is a trading style that can give a trader an insight in a possible change in the direction of market trends. This trading strategy will aid beginners in trading to avoid jumping into the market without proper analysis and back testing. Getting a working trading strategy is the beginning of the success of a trader in the crypto market and the perfect entry strategy is a good recommendation to every trader.

The perfect entry strategy is coined from the combination of the understanding of Price Action, Market Structure, the use of 200-period Moving Average, Japanese Candles and Stochastic Oscillator. To apply this strategy, you have to first identify the current market trend using your comprehension of the market structure and price action confirmed by the 200-period Moving Average. Secondly you check out for the price to form a small japanese candle on the 200-period Moving Average which has a small body and wicks. If the wick is in opposite directions to the current trend, it indicates that there is stability to continue with the current trend and no plans of going against it, therefore the price forms a rejection in the moving average and continue with the current trend. Lastly you use the stochastic oscillator to check out the overbought and oversold. In a bullish trend, the stochastic oscillator should be in the range of 0-20 while in a bearish trend, it should be in the range of 80-100. This is majorly used as the last confirmation after you must identified the first and second step above.

Source: Tradingview

A bearish trend detected with Perfect Entry Strategy

Source: Tradingview

A bullish trend detected with Perfect Entry Strategy

Question 2
Explain in your own words what candlestick pattern we should expect to execute a market entry using the Perfect Entry Strategy.

As we know that candlestick is a very vital means of knowing the direction of the market movement. It helps traders in making decisions before placing trades in the crypto market. They help traders who use price action in there strategy to determine whether the bears or the bulls are the ones moving the price of the market. For the perfect entry strategy, the most appropriate candlestick pattern we can use in executing trade is the Doji, Morning star and Evening star candle.
The Doji candles signify uncertainty between the bears and bulls. No one is in control of the market neither the bulls or the bears. A Doji candle has long wicks in both upwards and downwards, implying intense, harmonious pressure from both the sellers and buyers. When using the Doji in the perfect entry strategy, you look out for the wick that is on or close to the 200 moving average and also evaluate it with the stochastic oscillator to confirm your entry and stop loss as well.
Morning star candle is a 3 bar candle pattern where by the star is the middle candle that starts at the end of the first candle or slightly above it and signifies a change in trend from bearish to bullish.
The Evening star candle is the opposite of the morning star candle. They can both be used in the determining the accuracy of the perfect entry strategy

Question 3
Explain the trading entry and exit criteria for buy and sell positions in any cryptocurrency of your choice (Share your own screenshots)

The necessary criteas for executing the perfect entry strategy includes:

i. Your trade plan must duly obey all the three conditions for the perfect entry strategy. You should never place a trade even if it's one of the conditions that failed. The rule demands 100% of the condition.

ii. You must be patient enough to wait for another set up when the current one is falling short of one condition.

iii. When making financial aid investment plan, try to avoid a market structure that is ranging in nature because there can be a lot of uncertainties in the price.

iv. When placing your trade from the perfect entry strategy, the stop loss should go down below the small candle and your take profit should be just above the stochastic oscillator for both the bullish and bear market so that you can maximize adequate profit from the market and this gives you a ratio of 1:2 or 1:3 RRR which is a good risk management strategy as well.

If you take a look qt the screenshots, all the conditions are fulfilled in the them thereby making a good perfect entry strategy

Source: Tradingview

Source: Tradingview

Question 4
Trade 2 demo account trades using the “Perfect Entry” strategy for both a “Bullish” and “Bearish” scenario. Please use a shorter period of time to execute your entries. Important you must run your entries in a demo account to be properly evaluated.

I traded a demo account on tradeview using the BTCUSDT for bearish trend and DOGEBULLUSDT for bullish trend to illustrate what I learnt from this class. A good look at my screenshot explains everything in details.

Source: Tradingview

Source: Tradingview

Source: Tradingview

Source: Tradingview

Source: Tradingview

Source: Tradingview

Conclusion

I will say that this strategy is really worth the learning, research and practice. One can become a profitable trader putting into practice everything learnt in this lesson. I want to appreciate prof@lenonmc21 for this great lesson and hope for a more interesting one next time. Thanks.