The best price action setup ever

We have two core setups, Retest Variation (RTV) and Retest Concept (RTC)

These setups are objective rules which identify an old and well tested concept in price action, the “retest”

What we are attempting to do is use a set of rules to identify this situation, where you have price action which indicates it is safer to bet counter-trend. 

This exact point is where the risk reward ratio of the trade is at it’s best, and therefore the optimal time to enter.

We are using our system design principle of specificity to try and make sure that our setups behave similarly. To achieve that we are not simply trading all retest patterns that we see, but a subset of retest patterns.

We are trading Retest Patterns that happen immediately after a touch of the bollinger band (2,20 standard parameters)

Why? Because reversals are higher probability after an extreme. Bollinger bands represent an extreme reading, therefore reversal becomes a better trade.

We are getting even more specific by requiring that our setups on the 15 minute charts have “confirming evidence” on the 30 minute AND 60 minute charts.

There are 2 types of “confirming evidence” that we will be covering.

(One is simple, the other is a bit more complicated) 

So, let’s not worry about them yet but learn the rules of the first two setups.

Rules of the Retest Variation (RTV) Setup Long

SETUP COMPLETE

Enter on a break of the nearest half-pip or full pip above the setup bar high.

Stop loss at nearest half-pip or full-pip below the bollinger touch low.

Example:

Note that once the setup is complete, it is not entered immediately because the entry trigger is above the setup bar high, which is never reached.

In this situation you move the entry trigger to above the next bar high (which is, by definition a better risk-reward entry)

Some examples of long setups

The short setup is identical to the long setup in reverse.

(Note you should be skeptical of any system that attempts to treat longs and shorts differently. There are differences, but it’s too easy to over-optimize and curve fit)

Rules of the Retest Variation (RTV) Setup Short

SETUP COMPLETE

Enter on a break of the nearest half-pip or full pip below the setup bar low.

Stop loss at nearest half-pip or full-pip above the bollinger touch high.

Examples:

You’re welcome :)

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Scott