OTE Pattern Recognition Notes

Optimal Trade Entry Primer

• one of many trading patterns, one of the easiest
• trading plan needs to be simple:
  • what's your risk model
  • how to frame that?
  • what makes your entry
  • what gives you indicators of bullish/bearish market?
  • how do you execute the trade?
  • how do you manage the trade?
  • where do you take profits?
• what make the market predisposed to go higher or lower?
  • look at HTF (M, W, D, 4h) and look for key levels where price has moved away from in the past
  • HTF shows where the big players are most likely going to push things around. 
  • LTF is too noisy to show this detail. 
• 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.
• The impulse move has to incorporate a break in Market Structure.
• Using Fib Retracement as a visual guide, set the following levels
  • -1 - Symmetrical Price Swing
  • -0.62 - TP2
  • -0.27 - TP1
  • 0 - First Profit - Scaling 
  • 0.5 - Equilibrium
  • 0.618 - 62% retracement
  • 0.705 - OTE 70.5%
  • 0.79 - 79%
  • 1 - 100%, or likely SL
• 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.
• 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.
• Setups on 1h charts better than 5m charts because the pip movements will be larger.
• Key levels xxx.00, xxx.20, xxx.50, xxx.80, yyy.00
• Place the fibs on the body of the candles
• Market structure - example given:
  - monthly view
  
  
  - daily view
  
  
  - 15m view
• Note the following:
  • institutional levels 
  • old monthly high at 1.1720 (1.17137 rounded)
  • 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"
  • the new STH makes for a more likely trade opportunity. (market maker model) and opens up the chance for an OTE.
  • 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.
  • at the fib, we see price rockets away from a STL
• when old highs/lows are broken, trades will tend to reach back to those old positions (retail calls it "support")

Introduction

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Example 1

Example 2

Example 3

Example 4

Example 5

Example 6

Example 7

Example 8

Example 9

Example 10

Example 11

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Example 13

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Example 17

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Example 20