Smart Money – Live Trading
We came up with parameters identified by where smart money is and it comes from a very clear concept, a very sound concept that stands to the time and a very clear objective which had the most two critical things you always need when you build your trading system.
What is the goal of every trader?
Testing whether your model works before you start to scale and reproduce.
To create a model, a system model that is robust against natural time, then you can scale and reproduce it by increasing the position size or by increasing your percentage risk, but everything should be done not of the profit in mind but always with a risk in your mind. You must always know one critical thing of your system after you have done all your back testing and all your forward testing, what is your maximum draw down? Always risk because the upside will always look after itself.
The concept of the three criteria point before we enter on close of the bar or either on the high of the insider bar it is just all based on applying pressure coming back into the market.
Now let me just give you an example over here if you have to develop a parameter you can basically put some parameter saying that if “this” happens, if this particular three rules or four rules fulfill then I am going to enter on the close of the bar, if it doesn’t then I am going enter on the high of the bar. That’s the parameters that you need to decide upon and the concept based on that is better on a long basis. What we are looking for is whether buying pressure is coming back into the market so you can design your parameters. I can give you just an example, let’s just say on a forward timeframe if you have got a insider bar and if one enters on a close and the four hour needs to show me confirmed swing low point. Now again if you think in terms of quantified parameter basis that reduces subjectivity, guessing and doubt then this swing low needs to be quantified as well which is what we have as a smart money indicator which is all based on a certain parameter that makes the whole trading consistently being executed. The point here is that to have a quantified way of identifying the swing low and swing high such that the model becomes tight and then you can scale and reproduce it.
The most important thing is that you have a model, which is tight and quantified so that you can constantly execute and your stats are reliable, then you can scale and reproduce it.
What we are actually doing at the moment in terms of that is that we are looking to take a trade based on a forward timeframe which is a shorter timeframe for daily on a forward timeframe before the swing low confirms on the four hour and then once the forward swing low confirms, you need to hold on to it until it becomes a daily swing low. So in essence the concept here is that I want to enter when I get minor confirmation on some buying pressure coming into the market and then once we get that confirmation then I am waiting for the daily swing high to confirm before I get out of the trade. It is maybe 2-3 days holding period before we bank in our cash based on buying pressure when smart money come into the market.
Now that is some concept you can think about, work on and maybe even use our smart money indicator to help you towards getting that trade. As always stay disciplined, follow your trading plan and keep trading like a Master.