That’s the skinny on Linda’s trading setups. But setups are only a small part of what makes a trader of Linda’s caliber. In Trading Sardines she explains how successful trading requires much more than finding a good chart pattern. It’s about having a sound process, robust research methods, solid position sizing, good market reads and a. You can buy the book here. Too lazy to write that blog post about Linda Raschke's autobiography, 'Trading Sardines,' I'll just post excerpts I liked in this thread: — C. Maoxian (@maoxian) July 11, 2019. Most underestimate the time and energy required to achieve consistent profitability.' Maoxian (@maoxian) July 11.
The Holy Grail is, of course, not the Holy Grail. Linda Bradford Raschke and Larry Connors named it so for its simplicity. As both of them are prominent traders, this trading strategy is hugely popular.
ADX Lovers:Day Trading, Range Trading
Trading Rules For The Holy Grail
Rules For Long
Linda Bradford Raschke Trading Sardines Pdf
- 14-period ADX is initially above 30 and rising
- Prices retrace down to 20-period simple moving average (SMA)
- Place buy order at the high of the bar that touches 20-period SMA
Rules For Short
- 14-period ADX is initially above 30 and rising
- Prices retrace up to 20-period SMA
- Place sell order at the low of the bar that touches 20-period SMA
The Holy Grail Trading Examples
Winning Trade – Bullish
This is a daily chart of Hewlett-Packard (HPQ on NYSE). The bottom panel shows the ADX rising above 30. ADX measures trend, so this criterion finds markets that are trending strongly.
In this trending stock, we saw a pullback to the 20-period SMA. We entered at the high of the bar that touches the SMA. The trend continued beyond this chart and gave a profit potential of around $9.00 per share.
The ADX only served to confirm what prices showed. The series of 13 bullish bars was all that any trader needed to see the upward trend. The marked bar offers a great entry point as the day gapped down before rebounding up within the day. An extremely bullish sign.
Losing Trade – Bullish
This is a daily chart of EUR/USD spot forex.
Again, the ADX rose above 30 to show a strong bullish trend. Then, prices retraced to the 20-period SMA to present a Holy Grail long setup. We entered on the high of a bullish reversal bar. However, the market hit our stop two days later.
This entry looked good with a nice bullish reversal bar as the signal bar. Moreover, it looked like a possible failed downside breakout of the trading range at the top.
However, the increasing number of dojis showed a lack of buying pressure before the pullback. Also, before the marked reversal bar, there was a bearish outside bar. After entering the trade, the entry bar became a doji which was a signal for more conservative and nimble traders to exit earlier to limit their losses.
Review – The Holy Grail Trading Setup
The Holy Grail trading strategy finds retracements within healthy trends. You don’t need the ADX to see strong trends, as they are hardly subtle. However, the ADX keeps new traders out of trouble and provides a convenient way to scan for trending stocks.
With regards to finding trends, the criterion of ADX > 30 has two drawbacks. First, a high ADX can mean that the trend is overdone and may reverse soon. Traders might enter at the worst possible timing. Second, gradual and protracted trends may unfold entirely without the ADX ever crossing above 30. This will result in missing some trades.
Street Smarts: High Probability Short-Term Trading Strategies explains how to re-enter a trade and to look for a second retracement. Jewel pieces of you flac torrent. The book is an excellent read as the authors explain the concepts underlying each trading strategy very clearly.
Trading Sardines Linda Raschke Pdf Download
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