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Wiki source code of OTE Pattern Recognition Notes

Version 22.1 by Drunk Monkey on 2020-06-29 20:34
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1 {{box cssClass="box floatinginfobox" title="**Quick Links**"}}
2 {{toc start="2"/}}
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4
5 == {{id name="Primer"/}}Optimal Trade Entry Primer ==
6
7 * one of many trading patterns, one of the easiest
8 * trading plan needs to be simple:
9 ** what's your risk model
10 ** how to frame that?
11 ** what makes your entry
12 ** what gives you indicators of bullish/bearish market?
13 ** how do you execute the trade?
14 ** how do you manage the trade?
15 ** where do you take profits?
16 * what make the market predisposed to go higher or lower?
17 ** look at HTF (M, W, D, 4h) and look for key levels where price has moved away from in the past
18 ** HTF shows where the big players are most likely going to push things around.
19 ** LTF is too noisy to show this detail.
20 * Assuming bullish market, we are looking for where the market wants to trade higher.  OTE is based on buying during the retracements that occur before the further push upwards.
21 * The impulse move has to incorporate a break in Market Structure.
22 * Using Fib Retracement as a visual guide, set the following levels
23 ** -1 - Symmetrical Price Swing
24 ** -0.62 - TP2
25 ** -0.27 - TP1
26 ** 0 - First Profit - Scaling
27 ** 0.5 - Equilibrium
28 ** 0.618 - 62% retracement
29 ** 0.705 - OTE 70.5%
30 ** 0.79 - 79%
31 ** 1 - 100%, or likely SL
32 * OTE (70.5%) is an ideal target.  getting deeper is better, but you run the risk of not filling your order.  62% retracement is also acceptable, but it results in smaller profits because our SL range will be larger, necessitating smaller order sizes to maintain our risk profile.
33 * First Scaling, or slightly before, represents the place to take initial profits.  It should be a decent return, preferable better than 1:2 risk/reward, but slightly less than 2 (1.5? 1x75?) is also acceptable.
34 * Setups on 1h charts better than 5m charts because the pip movements will be larger.
35 * Key levels xxx.00, xxx.20, xxx.50, xxx.80, yyy.00
36 * Place the fibs on the body of the candles
37 * Market structure - example given:
38 - monthly view
39 [[image:Screenshot 2020-06-29 at 03.11.56.png]]
40 \\- daily view
41 [[image:Screenshot 2020-06-29 at 03.14.02.png]]
42 \\- 15m view[[image:Screenshot 2020-06-29 at 03.06.46.png]]
43 * Note the following:
44 ** institutional levels
45 ** old monthly high at 1.1720 (1.17137 rounded)
46 ** price runs down until it hits the 20 level (1.1720), rallies and creates a new short term high (old - middle red line, new STH, top red line. It's also called a "market structure break"
47 ** the new STH makes for a more likely trade opportunity. (market maker model) and opens up the chance for an OTE.
48 ** also, a high, with two lower highs on either side makes that high more significant.  when this high is broken, it's a more convincing move than breaking the other shorter term highs, thus giving us the opportunity to find a likely OTE.
49 ** at the fib, we see price rockets away from a STL
50 * when old highs/lows are broken, trades will tend to reach back to those old positions (retail calls it "support")
51
52 == {{id name="Intro"/}}Introduction ==
53
54 * how to annotate the charts to look for specific price patterns
55 * study for the patterns for a month, and it'll start to become more easily recognizable as you train your brain to recognize it, then see if you can see it live
56 * the pattern should appear every day, but not necessarily on the same pairs
57 * daily chart - audusd, 20-apr-2020 contains two down candles, showing orderblock
58 [[image:Screenshot 2020-06-29 at 04.21.46.png]]
59
60 * the two equal lows in May are sensitive to prices in that order block
61 [[image:Screenshot 2020-06-29 at 04.23.52.png]]
62
63 * we are primarily looking for reactions to the previous days range. (last visible green candle in the picture above)
64 * can we determine whether the price is going to be able to break the previous days high or low?
65 [[image:Screenshot 2020-06-29 at 04.50.28.png]]
66 We can see that the recent lows pushed slightly into the order block, but returned indicating that prices doesn't currently want to run lower.
67
68 * AUDUSD 5M example[[image:Screenshot 2020-06-29 at 04.58.02.png]]
69 Mark out the previous days high and low.
70 \\The black line (6450) represents the closest institutional or key level near the previous days high.  The blue lines above and below are a 10 pip spread.
71
72 * The OTE pattern occurs during the 8:30 to 11:00am NY session.  That's when the major news and reports tends to come out. 
73 [[image:Screenshot 2020-06-29 at 05.02.49.png||queryString="width=385&height=579" height="579" width="385"]]
74 The green box represents the 62 to 79% Fib retracement levels in the OTE pattern
75
76 * The Fib box is drawn from the low to high when the previous days high has been broken.
77 * Trade
78 ** lot size that allows taking the partials (0.04, take a bit off each time? 
79 ** SL will be set below the 100 level.
80 ** Profit taking
81 *** take at 1st scaling at -0.5 or 15 pips or more
82 *** take next at -1.0 or 15 pips or more (or slightly before - round down to the nearest 10 level)
83 *** take a scaling at 100 pips regardless of where you are
84 *** take next at -1.5
85 *** take next at -2.0
86 *** once price moves beyond the 1st scaling, move the SL up (just beyond BE)
87 *** 2nd scaling - move SL above SL.
88 *** other scalings - watch the trades, then set SL beyond BE, not to close so there is room for the trade to run.
89 *** get out by the last scaling
90 * Fib settings for Trading View:
91 [[image:Screenshot 2020-06-29 at 05.10.27.png||queryString="width=363&height=533" height="533" width="363"]]
92 We could also at -1.5 level
93
94 * key things learned
95 ** when to move a stop
96 ** what entry price to look for
97 ** where stop loss should be
98 ** where do you take partials
99 ** what you avoid doing to your revised stops (choking them out)
100
101 == {{id name="Ex02"/}}Example 2 ==
102
103 * example
104
105 == {{id name="Ex03"/}}Example 3 ==
106
107 * example
108
109 == {{id name="Ex04"/}}Example 4 ==
110
111 * example
112
113 == {{id name="Ex05"/}}Example 5 ==
114
115 * example
116
117 == {{id name="Ex06"/}}Example 6 ==
118
119 * example
120
121 == {{id name="Ex07"/}}Example 7 ==
122
123 * example
124
125 == {{id name="Ex08"/}}Example 8 ==
126
127 * example
128
129 == {{id name="Ex09"/}}Example 9 ==
130
131 * example
132
133 == {{id name="Ex10"/}}Example 10 ==
134
135 * example
136
137 == {{id name="Ex11"/}}Example 11 ==
138
139 * example
140
141 == {{id name="Ex12"/}}Example 12 ==
142
143 * example
144
145 == {{id name="Ex13"/}}Example 13 ==
146
147 * example
148
149 == {{id name="Ex14"/}}Example 14 ==
150
151 * example
152
153 == {{id name="Ex15"/}}Example 15 ==
154
155 * example
156
157 == {{id name="Ex16"/}}Example 16 ==
158
159 * example
160
161 == {{id name="Ex17"/}}Example 17 ==
162
163 * example
164
165 == {{id name="Ex18"/}}Example 18 ==
166
167 * example
168
169 == {{id name="Ex19"/}}Example 19 ==
170
171 * example
172
173 == {{id name="Ex20"/}}Example 20 ==
174
175 * example