Skip to Content

Wiki source code of OTE Pattern Recognition Notes

Version 27.1 by Drunk Monkey on 2020-07-06 17:48
Show last authors
1 {{box cssClass="box floatinginfobox" title="**Quick Links**"}}
2 {{toc start="2"/}}
3 {{/box}}
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
44 * Note the following:
45 ** institutional levels
46 ** old monthly high at 1.1720 (1.17137 rounded)
47 ** 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"
48 ** the new STH makes for a more likely trade opportunity. (market maker model) and opens up the chance for an OTE.
49 ** 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.
50 ** at the fib, we see price rockets away from a STL
51
52 * when old highs/lows are broken, trades will tend to reach back to those old positions (retail calls it "support")
53
54 == {{id name="Intro"/}}Introduction ==
55
56 * how to annotate the charts to look for specific price patterns
57 * 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
58 * the pattern should appear every day, but not necessarily on the same pairs
59 * daily chart - audusd, 20-apr-2020 contains two down candles, showing orderblock
60 [[image:Screenshot 2020-06-29 at 04.21.46.png]]
61
62 * the two equal lows in May are sensitive to prices in that order block
63 [[image:Screenshot 2020-06-29 at 04.23.52.png]]
64
65 * we are primarily looking for reactions to the previous days range. (last visible green candle in the picture above)
66 * can we determine whether the price is going to be able to break the previous days high or low?
67 [[image:Screenshot 2020-06-29 at 04.50.28.png]]
68 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.
69
70 * AUDUSD 5M example[[image:Screenshot 2020-06-29 at 04.58.02.png]]
71 Mark out the previous days high and low.
72 \\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.
73
74 * 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. 
75 [[image:Screenshot 2020-06-29 at 05.02.49.png||queryString="width=385&height=579" height="579" width="385"]]
76 The green box represents the 62 to 79% Fib retracement levels in the OTE pattern
77
78 * The Fib box is drawn from the low to high when the previous days high has been broken.
79 * Trade
80 ** lot size that allows taking the partials (0.04, take a bit off each time? 
81 ** SL will be set below the 100 level.
82 ** Profit taking
83 *** take at 1st scaling at -0.5 or 15 pips or more
84 *** take next at -1.0 or 15 pips or more (or slightly before - round down to the nearest 10 level)
85 *** take a scaling at 100 pips regardless of where you are
86 *** take next at -1.5
87 *** take next at -2.0
88 *** once price moves beyond the 1st scaling, move the SL up (just beyond BE)
89 *** 2nd scaling - move SL above SL.
90 *** other scalings - watch the trades, then set SL beyond BE, not to close so there is room for the trade to run.
91 *** get out by the last scaling
92 * Fib settings for Trading View:
93 [[image:Screenshot 2020-06-29 at 05.10.27.png||queryString="width=363&height=533" height="533" width="363"]]
94 We could also at -1.5 level
95
96 * key things learned
97 ** when to move a stop
98 ** what entry price to look for
99 ** where stop loss should be
100 ** where do you take partials
101 ** what you avoid doing to your revised stops (choking them out)
102
103 == {{id name="Ex02"/}}Example 2 ==
104
105 * example
106
107 == {{id name="Ex03"/}}Example 3 ==
108
109 * example
110
111 == {{id name="Ex04"/}}Example 4 ==
112
113 * example
114
115 == {{id name="Ex05"/}}Example 5 ==
116
117 * example
118
119 == {{id name="Ex06"/}}Example 6 ==
120
121 * example
122
123 == {{id name="Ex07"/}}Example 7 ==
124
125 * example
126
127 == {{id name="Ex08"/}}Example 8 ==
128
129 * example
130
131 == {{id name="Ex09"/}}Example 9 ==
132
133 * example
134
135 == {{id name="Ex10"/}}Example 10 ==
136
137 * example
138
139 == {{id name="Ex11"/}}Example 11 ==
140
141 * example
142
143 == {{id name="Ex12"/}}Example 12 ==
144
145 * example
146
147 == {{id name="Ex13"/}}Example 13 ==
148
149 * example
150
151 == {{id name="Ex14"/}}Example 14 ==
152
153 * example
154
155 == {{id name="Ex15"/}}Example 15 ==
156
157 * example
158
159 == {{id name="Ex16"/}}Example 16 ==
160
161 * example
162
163 == {{id name="Ex17"/}}Example 17 ==
164
165 * example
166
167 == {{id name="Ex18"/}}Example 18 ==
168
169 * example
170
171 == {{id name="Ex19"/}}Example 19 ==
172
173 * example
174
175 == {{id name="Ex20"/}}Example 20 ==
176
177 * example