Perfect Entry Strategy using Stochastic Oscillator + 200 Simple Moving Average - Steemit Crypto Academy S5W3 for @lenonmc21
State in your own words what you understand about the Perfect Entry Strategy (Place at least 2 examples on crypto assets)?
THE PERFECT ENTRY STRATEGY
The Perfect Entry Strategy is a strategy used to place a buy order and take profit that involves the use of 200 moving average indicator, stochastic oscillator, a trending market structure with a candlestick pattern. In this strategy, all the four strategies must present themselves in order to make an entry into the market (either buy or sell, take profit).
An example of Bullish Market Structure that can be used to make an entry using the perfect entry strategy.
Screenshot from tradingview
Frist, to determine the perfect entry strategy, one has to know the structure in which the market is trending. A trending market can either be in a bull or bear. This is to say that if the market is ranging (not moving in any direction), a trending market structure cannot be presented.
In the perfect entry strategy, the 200 moving average should be close to the price in either an uptrend or downtrend.
As this happens, taking a look at the previous candlestick before the most recent, a doji candlestick with almost equal length of wick at the top and bottom was formed. This is to say that the trend has become weak and may no longer continue in it's original trend.
Bearish scenario from which a buy order can be made using the perfect entry strategy.
Screenshot from tradingview
A bullish scenario for taking sell order using the perfect entry strategy.
Screenshot from tradingview
Then look at the stochastic oscillator to see if it is in the overbought or oversold level. If it is overbought, the indicator will be in at or between the 80 - 100 point while of it's in oversold, the indicator will be in the 0 - 20 point.
Screenshot from tradingview
Screenshot from tradingview
All these indicates that it is a perfect time to enter the market whether a trader wants to buy or sell in order to take maximum profits.
Explain in your own words what candlestick pattern we should expect to execute a market entry using the Perfect Entry Strategy.
The candlestick pattern we expect to execute a market entry using the perfect entry strategy is the one that has a somewhat plus sign (+) but sometimes in this case the body might be ticker than the ordinary plus sign. This candlestick pattern is referred to as the doji candlestick pattern. Once this candlestick appears in a trending market, just know that the trend is about to reverse, therefore a decision can be made. What one should look out for is the wick at the top and bottom of the candle with just a little body.
The Doji candlestick pattern is mostly seen at the end of a trending market and after it, the price reverses and goes in the opposite direction or may range but will. stop going in its initial direction.
Explain the trading entry and exit criteria for buy and sell positions in any cryptocurrency of your choice (Share your own screenshots)
The simple criteria to be able to execute perfectly the perfect entry strategy are that
Proper planning and preparation must be made to see that all the conditions are meant before an order is made with the strategy. This is because if one of the conditions fails, even though it looks like the trend has reversed, it would come back to go in the trend it was initially. The strategy needs all three conditions to be met in order to get the best out of it.
It is best to look out for another opportunity if any of the conditions is not met. This still buttress the fact that all the three conditions are needed to determine what the price will do. All the three conditions meant explains the confirmation of the signal given by all the conditions. This assures the trader a greater chance of winning.
Another criterium is that the asset should not be ranging. A ranging market is not in any particular direction. This is because the candlestick pattern needed for perfect entry also appears in ranging market and in this case, one cannot exactly determine where the price is headed. What I am saying in essence is that if the price in a range, all the three conditions can also be fulfilled but may not go in any particular direction or the direction one wants.
Screenshot from tradingview
Screenshot from tradingview
- Using this strategy, the stop loss should be set below the doji candlestick where the confluence was formed on the chart. Then take profit should be set somewhere between 80 and 100 on the reading of the stochastic oscillator indicator. This is a point above 80 on the reading of the indicator helping one to make use of the opportunity of the uptrend that leaves one with a risk reward ratio of 1 - 2 or 1 - 3 or if the bullish run is sustained for long, we have have 1 - 4 giving maximum profit from the trade.
Practice (Remember to use your own images and put your username). Trade 2 demo account trades using the “Perfect Entry” strategy for both a “Bullish” and “Bearish” scenarios. 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 took a live trades on Huobi global for me to attempt this question. I sported just the candlestick condition met on the Huobi Exchange for STEEM/USDT chart and when I went to check on trading view, it was perfect, so I came back to Huobi, made the trades and provided the screenshot for analysis from trading view.
Sell entry for a Bullish Senario of the Perfect entry strategy
Buy Entry for a Bearish Senario of the Perfect entry Strategy
Screenshot from tradingview
Screenshot fromHuobi Exchange
Trade on Huobi Exchange
Trade on Huobi Exchange
Conclusion
The perfect entry strategy is a very good one that any trader should know. It's 99% accurate if all the conditions are met. It is another side of Crypto trading added to my knowledge. For the practical trades I didn't with it, it's accuracy is a top notch.
Though tasking and time consuming to complete, I am happy I attempted this course. It will really help me in trading.
Cc: @lenonmc21