New trading rules

I looked at many ways to trade market short time, including harmonics on M1 and 1 pip range bars, channel trading as per Lance Beggs, and many other, but in my opinion they all lack that risk-reward ratio that I am looking after and probability of success. So here I am back to Order Flow trading. But instead of going for numbers of different setups and possibilities I am selecting only few this time:




POWER LEVELS

A. Reversal points at the Power Levels (adjusted option strikes) - EURUSD, GBPUSD and UDSJPY. First two are the best IMO. Also available on SP500, Gold. SP500 might be a killer but my platform doesn't have it and I don't want to engage in different markets, platforms, etc. What you do here is trading a reversal. Price must touch or pierce briefly a power level and produce a reversal bar. I am trading range bars with all methods described here. I am looking for price to retreat from the level and produce one full 1-pip range bar (without wicks or tails) and enter there. Stop is very tight - 2-3 pips. Good trades will reverse and never look back for some 10-20 pips! Yes most trades will get stop out, but in many cases tight stop will prevent bigger loss but in some will kick you out of a decent trade. But best trades are outs as reversal momentum is high and they can produce even 30-40 pips at glance. With 2 pips stop! I don't mind getting stopped 3-4 times to get one of these. Remember tight stop doesn't mean you go all-in with 100:1 leverage since 2 pips is only 2 per cents! We will get numerous losses in a row, so unless you are on demo or trading a small account you don't mind to put at risk, use something like 0.5% risk or even less. Good trade will give you several whole percentage point gain! And that can be few times a day! Don't trade this on a heaving news day, it works best on a range bound day flat or news scheduled or unscheduled. Remember not to jump in front of a freight train! We don't place limit orders at power level. yes sometime it can give a perfect reversal point with no attended trade but sometimes price will just barge through like a missile. You never know. This is why we want to see a reversal first and go on confirmation. This is very similar to my news flow trading method from the separate thread, but instead of waiting for momentum to pause, produce small reversal and then go again in the initial direction, we look for momentum to stall and start a reversal and enter only then.


Here is an example of Power Level order flow scalps:






Barrier options scalps. 

A. Unlike these options that expire every day and rumoured widely on RanSquawk, Thomson-Reuters and like, barrier or NT options are very serious things. They can be played 2 ways: reversal and barrier break. For reversal you don't look for the price to touch the number, in some cases touching the number means it starts to break. You look for the price to approach some 3-5 pips away from the number and reverse. Look for an entry signal there. Stop is just on the other side of the barrier. These trades are of very high probability I would say much higher than 50%, rather 90%, so feel free to go heavier than in Power Level method. Reversals can be 10-20 pips, sometimes more, look for the signs of stuggle and reversal. Don't wait for a retest. Breaking is similar but even easier - 1 pip away stop order on the other side of the barrier with a stop 2-3 pips away, but look for an initial push only, it maybe 10-15 pips usually, then price will retest the level. But at this point is may go back on the other side as there is nothing stopping it now. This makes for an another good trade method.

B. Barrier option break swings. As described in pt3, after barrier is broken price most likely will retest the level. We enter there, stop must be wider, some 20 pips or a previous swing high/low where barrier defenders pushed it last time before the barrier broke, but look for a big gains here, 100 pips is an easy target. Again this is a highly probably trade, so risking 1-2% is not a crazy idea.

As usual, don't trade something you can't lose, and read appropriate US disclaimers if you have anything to do with USA (I could not care less though about what USA says), but use your own common sense.