P1: PIC/PIC c06
August 18, 2008
Printer: Yet to come
Entry Strategies and Position Size
FIGURE 6.9 Setup on Higher Time Frame Weekly Data
position trades with minimal capital exposure and significant profit potential. Currency ETFs can be used for minimal to no leverage for potential long-term positions. The trailing one-bar-high (low) entry strategy is completely objective and usually sets up with minimal capital exposure. It has some superb benefits. The trade will not be executed unless the market moves in the anticipated direction by taking out the trailing one-bar-high or low. The initial capital exposure is always known before the trade is executed because the setup defines the exact entry and stop prices. If the capital exposure is too large to be accepted, either pass up the trade or trade a minimal leveraged or unleveraged market such as an ETF or mutual fund instead of a futures contract or highly leveraged Forex position. If the market doesnâ€™t immediately move in the anticipated direction and take out the immediate 1BH(L), the trade may be entered within the next few bars, possibly at an even better price or with less capital exposure. If the setup conditions are voided by a smaller time frame momentum reversal against the higher time frame momentum direction, the trade is voided until the next setup is made.