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Wiki source code of OTE Pattern Recognition Notes

Version 52.1 by Drunk Monkey on 2020-07-06 21:26
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1 {{box cssClass="box floatinginfobox" title="**Quick Links**"}}
2 {{toc start="2" depth="5" numbered="true"/}}
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 ====== ~[[[top>>doc:]]] ======
55
56 == {{id name="Intro"/}}Introduction - AUDUSD ==
57
58 * how to annotate the charts to look for specific price patterns
59 * 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
60 * the pattern should appear every day, but not necessarily on the same pairs
61 * daily chart - audusd, 20-apr-2020 contains two down candles, showing orderblock
62 [[image:Screenshot 2020-06-29 at 04.21.46.png]]
63
64 * the two equal lows in May are sensitive to prices in that order block
65 [[image:Screenshot 2020-06-29 at 04.23.52.png]]
66
67 * we are primarily looking for reactions to the previous days range. (last visible green candle in the picture above)
68 * can we determine whether the price is going to be able to break the previous days high or low?
69 [[image:Screenshot 2020-06-29 at 04.50.28.png]]
70 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.
71
72 * AUDUSD 5M example[[image:Screenshot 2020-06-29 at 04.58.02.png]]
73 Mark out the previous days high and low.
74 \\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.
75
76 * 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. 
77 [[image:Screenshot 2020-06-29 at 05.02.49.png||queryString="width=385&height=579" height="579" width="385"]]
78 The green box represents the 62 to 79% Fib retracement levels in the OTE pattern
79
80 * The Fib box is drawn from the low to high when the previous days high has been broken.
81 * Trade
82 ** lot size that allows taking the partials (0.04, take a bit off each time? 
83 ** SL will be set below the 100 level.
84 ** Profit taking
85 *** take at 1st scaling at -0.5 or 15 pips or more
86 *** take next at -1.0 or 15 pips or more (or slightly before - round down to the nearest 10 level)
87 *** take a scaling at 100 pips regardless of where you are
88 *** take next at -1.5
89 *** take next at -2.0
90 *** once price moves beyond the 1st scaling, move the SL up (just beyond BE)
91 *** 2nd scaling - move SL above SL.
92 *** other scalings - watch the trades, then set SL beyond BE, not to close so there is room for the trade to run.
93 *** get out by the last scaling
94 * Fib settings for Trading View:
95 [[image:Screenshot 2020-06-29 at 05.10.27.png||queryString="width=363&height=533" height="533" width="363"]]
96 We could also at -1.5 level
97
98 * key things learned
99 ** when to move a stop
100 ** what entry price to look for
101 ** where stop loss should be
102 ** where do you take partials
103 ** what you avoid doing to your revised stops (choking them out)
104
105 ====== ~[[[top>>doc:]]] ======
106
107 == {{id name="Ex02"/}}Example 2 - USDJPY ==
108
109 * Daily Chart
110 [[image:Screenshot 2020-07-07 at 01.38.28.png]]
111 \\fib drawn from the swing low, to the swing high
112
113 * previous days high (2nd last candle) broke the high from the day before that.  This means we could potentially see a turn, or an expansion to the upside
114 [[image:Screenshot 2020-07-07 at 01.40.40.png]]
115 \\Our high is 106.65(7)
116
117 * Dropping into the 5m chart:
118 [[image:Screenshot 2020-07-07 at 01.43.50.png]]
119 \\Where do you think the OTE is going to be?  Look before scrolling further.  Remember the magic hours of 08:30 - 11:00 NY time. 
120
121 * Fib added from the previous low at point 1, to the last recent high at point 2
122 [[image:Screenshot 2020-07-07 at 01.47.47.png]]
123
124 * Trading View chart, 15m
125 [[image:Screenshot 2020-07-07 at 02.10.10.png]]
126
127 * On the above chart is a second OTE occurring just after the OTE period opening
128 [[image:Screenshot 2020-07-07 at 02.19.10.png]]
129 \\From the swing low, to the new high breaking the previous high.  The OTE opportunity crosses the weekend.  
130
131 * 5m chart view
132 [[image:Screenshot 2020-07-07 at 02.22.17.png||queryString="width=591&height=819" height="819" width="591"]]
133 \\the recent low marked, right side showing the new high forming the OTE pattern.
134
135 ====== ~[[[top>>doc:]]] ======
136
137 == {{id name="Ex03"/}}Example 3 - S&P 500 E-Mini Futures (June 2020) ==
138
139 * Daily Chart
140 [[image:Screenshot 2020-07-07 at 02.43.11.jpg]]
141
142 * currently inside of an OTE 
143 [[image:Screenshot 2020-07-07 at 02.46.32.jpg||height="696" width="687"]]
144 \\The fib provides a framework - old low, old high, retracement back to the 79 level.  On the daily chart, the momentum is likely to go higher.  It could be reaching for the old high, it could break through, or it could fail.  It doesn't matter.
145 \\What we do care is that it is likely to run the previous day's high.
146
147 * Previous day's high marked
148 [[image:Screenshot 2020-07-07 at 02.53.30.jpg||height="167" width="848"]]
149
150 * 5m chart
151 [[image:Screenshot 2020-07-07 at 03.24.45.jpg]]
152
153 * Marked up
154 [[image:Screenshot 2020-07-07 at 03.28.25.jpg]]
155 \\The "big figure" is 2900.  Price has traded down into that during the NY session.  Whenever a big figure is swept, either down into, or up into, it generally creates a tradeable bounce or retracement, even if it is very short lived. 
156
157 * Focus on the NY session time to find the OTE
158 [[image:Screenshot 2020-07-07 at 03.31.40.jpg||height="417" width="313"]]
159
160 * OTE marked
161 [[image:Screenshot 2020-07-07 at 03.34.05.jpg||height="850" width="775"]]
162
163 * and here is how it played out
164 [[image:Screenshot 2020-07-07 at 03.36.45.jpg]]
165 \\In this example, the market tends to want to gravitate towards the old high because the market is bullish, and will catch out the market short sellers.
166
167
168 ====== ~[[[top>>doc:]]] ======
169
170 == {{id name="Ex04"/}}Example 4 - GBPUSD ==
171
172 * 1H chart
173 [[image:Screenshot 2020-07-07 at 04.22.04.jpg]]
174
175 * Marked up using "support and resistance" paradigm. Note that this is a retail trading mindset and it is wrong.
176 [[image:Screenshot 2020-07-07 at 04.31.28.jpg]]
177 \\Again.  Wrong.
178
179 * ICT Markup - [Market Efficiency Paradigm] (link to definition later)
180 [[image:Screenshot 2020-07-07 at 04.34.19.jpg]]
181 \\It's basically the narrative of why prices goes where it does and why it reacts the way it does when it reaches there and what it is going to do next.
182
183 ====== ~[[[top>>doc:]]] ======
184
185 == {{id name="Ex05"/}}Example 5 ==
186
187 * example
188
189 ====== ~[[[top>>doc:]]] ======
190
191 == {{id name="Ex06"/}}Example 6 ==
192
193 * example
194
195 ====== ~[[[top>>doc:]]] ======
196
197 == {{id name="Ex07"/}}Example 7 ==
198
199 * example
200
201 ====== ~[[[top>>doc:]]] ======
202
203 == {{id name="Ex08"/}}Example 8 ==
204
205 * example
206
207 ====== ~[[[top>>doc:]]] ======
208
209 == {{id name="Ex09"/}}Example 9 ==
210
211 * example
212
213 ====== ~[[[top>>doc:]]] ======
214
215 == {{id name="Ex10"/}}Example 10 ==
216
217 * example
218
219 ====== ~[[[top>>doc:]]] ======
220
221 == {{id name="Ex11"/}}Example 11 ==
222
223 * example
224
225 ====== ~[[[top>>doc:]]] ======
226
227 == {{id name="Ex12"/}}Example 12 ==
228
229 * example
230
231 ====== ~[[[top>>doc:]]] ======
232
233 == {{id name="Ex13"/}}Example 13 ==
234
235 * example
236
237 ====== ~[[[top>>doc:]]] ======
238
239 == {{id name="Ex14"/}}Example 14 ==
240
241 * example
242
243 ====== ~[[[top>>doc:]]] ======
244
245 == {{id name="Ex15"/}}Example 15 ==
246
247 * example
248
249 ====== ~[[[top>>doc:]]] ======
250
251 == {{id name="Ex16"/}}Example 16 ==
252
253 * example
254
255 ====== ~[[[top>>doc:]]] ======
256
257 == {{id name="Ex17"/}}Example 17 ==
258
259 * example
260
261 ====== ~[[[top>>doc:]]] ======
262
263 == {{id name="Ex18"/}}Example 18 ==
264
265 * example
266
267 ====== ~[[[top>>doc:]]] ======
268
269 == {{id name="Ex19"/}}Example 19 ==
270
271 * example
272
273 ====== ~[[[top>>doc:]]] ======
274
275 == {{id name="Ex20"/}}Example 20 ==
276
277 * example
278
279 ====== ~[[[top>>doc:]]] ======