Trading system "Two screens of graphical models"

In the master class "Be a Trader with iLearney"

Striving to understand the nature of interaction between different time intervals is an important step in the process of learning the mechanism of price movement. Many famous traders have developed their own trading systems based on the use of a few time-frames. This is how the trading systems of "Elder's Three Screens" and "Shaap's Two Screens" emerged, allowing to conclude deals on smaller time intervals, based on conditions arising on larger time intervals.

multi-timeframe strategies

On the other hand, the concept of minimalism is present in modern trading as one of the directions, which is associated with the possibility to perform operations based on the signals given by simple graphical patterns. To use this approach, you only need to identify them in the market in a timely manner, which is not very difficult.

Combining the two trading directions into one coherent system allows you to trading strategy "Two Screens of Chart Patterns". It uses various price configurations of classical technical analysis. At the same time, simple models are preferred on a larger time interval, and on a smaller one - more complex ones.

Senior timeframe - first screen

So on the daily chart. In July 2012, a simple pattern was formed in gold quotations called pin bar. One of my earlier materials was devoted to the peculiarities of its identification. In this case, the opening and closing of the bar are located within the range of the previous day, and the long shadow indicates the bears' inability to continue the downtrend.

In accordance with the general principles of strategy building based on the pin barIn the case of a new level, it is recommended to open a buy position the next day in the area of its maximum. In this case, the main problem is to determine the level at which the protective stop order should be placed. This problem can be solved by using the second screen.

Junior timeframe - second screen

Moving on to the intraday charts, you can discover how closely price interacts on different time frames.

On the hourly timeframe It is well seen that on July 12, when a pin-bar was formed on the dailies, two chart configurations were formed at once: several consecutively declining lows are associated with the "Three Indians" pattern, immediately after which the 1-2-3 pattern emerged.

Such interaction of models allowed to identify an earlier entry point, based on testing the resistance line, and not to wait for the movement to the level of corrective maximum, which corresponded to a higher extremum of the pin bar.

Other elements of the Two Screen strategy

Moreover, when using a two-screen strategy, the trader has the opportunity to reduce the size of the stop order in pips by placing it in the point 3 area, as required by the 1-2-3 trading principles. As a result, it is possible to increase the position size, which can lead to a better financial result.

Fibonacci projections are used as a target reference point. The trader needs to track all important levels in the form of 161.8%, 224%, etc. In this example, the position was opened against the trend, which forced to be extremely moderate in setting trade targets.

If you are ready to take a greater risk, the formation of a pin bar on the daily chart can be predicted based on the formation of the "Three Indians" pattern. If it is realized, a familiar configuration will appear on a larger time interval. Understanding this pattern allows you to open a position in advance and, accordingly, count on a larger profit.

In the material presented, I have described the basics of the "Two Screens of Graphical Patterns" trading systemThe second screen can be used for additional filters. Firstly, a trader can have several simple models in his arsenal, and secondly, additional filters can be used on the second screen. I will try to tell you how it is done in my next publications. Now I would be interested if the readers would express their opinion about the presented trading system. How effective can it be, in your opinion? And what "pitfalls" can a trader encounter when implementing it in his practice?