TSTs and BOFs.. Nothing else..
Trading is a process of evolution and you have to grow as a trader every single day. Your career starts to end when you stop growing. It’s like rowing a boat in the upstream and you will end up in the place where you started (much behind in the worst case) when you stopped rowing.
I have written an article about using zones instead of lines for range boundaries back in May. I am no more using them in my trading as I have found a way to use horizontal lines everywhere and that is saving me from a lot of early entries and chasing. Thanks to active trade management.
So, what is it??
I have already shared the type of price interactions in one of my previous articles for TST, BOF and BPB setups. Forget about BPB for a moment. All the five setups(PB, CPB, BPB, TST, BOF) that I use drills down to only two setups TST and BOF, once the bias and the price level to operate on, is chosen. I have already explained how I form a bias in my previous articles. Now the next thing is to pick a level to operate on.
1) In TST, BOF and BPB setups, the level is the HTF S/R or the Range S/R. So it doesn’t take much effort to point them on the chart if you are good at structuring the market. Just go through the first three articles in the Beginner section to know how I structure the market if you are new to my trading style.
2) For PBs and CPBs, the virgin level (the level that is untested) that caused a supply/demand imbalance in the recent past is where will focus on. You might have already know how I do that from my recent posts in the FB page. Here are they.
HTF S/R(from HTF)
Virgin Minor S/; R (from LTF)
Trap level in the recent impulse move that trapped traders against my bias(from LTF)
Intermediate SH or SL while looking for a CPB.
The above four types of levels are arranged as per the priority. Suppose if the trend is up and there is an HTF S/R which is above a Virgin minor S/R, I look for a possible entry at the HTF S/R as it is at the top of my priority list. Make a note that I mentioned ‘possible entry’ and market has to confirm exhaustion at that level for me to place my entry order. If there are no signs of exhaustion at the level I am looking at, I ‘ll pass on that level and look for entry at another level.
Once the bias and the level is chosen, I will wait until market reaches that level. In other words, I will wait for a counter bias move to reach that level and react when it shows the sings of exhaustion at that level.
3) As I am fading the move against the bias, at the level I have chosen, my entry can be TST or BOF of that level. I will make a decision whether it is going to be a TST or a BOF, by looking at the momentum of the move I am fading (counter bias move). Once that decision is made, I will look for one of the price interactions (by looking at LTF) I have explained for TST and BOF to place a limit entry order. Look at the following image that I have shared yesterday in FB page.
TST and BOFs 1
The setup there was a PB and the entry was made at the red circle I have marked in the TTF chart. According to my feel for the order-flow, I anticipated that it is going to be a TST of the level I have chosen (a bull trap level), that coincided with the first diagram I have given in the ideal price interaction article for TST setups. (BOF of SH/SL + TST of the level). Waited for the exhaustion and timed the entry near the level.
Now, look at the trade taken by one of my friends(the first trade in the following image), Stefan on the same day which I missed out of hesitation.
TST and BOFs 2
The setup here is again a PB. The level he focused on was minor S/R from LTF. Looking at the immediate rejections from the new lows, he anticipated that it is going to be a BOF of that level rather than a TST, waited until it breaks that level instead of placing a blind limit order at the level(would have stopped out before moving down if looking for a TST), and then placed an order at the confirmation of BOF. Great stuff. The interaction here falls under the first interaction I have given for BOF in the price interactions article, ie. Breakout followed by immediate rejection and a test of the level before moving in the direction of the bias.
This might look like some complicated procedure for you if you are new to this, but it’s not. You just have to make a decision whether it’s going to be a TST or BOF, then wait until you are proved correct by the market while it is interacting with the level, and then time the entry. Trust me, your initial risk will be much lesser if you master this skill as you are entering at the edges of the structure, and you will get enough time to scratch for a small profit or at least breakeven if you are proven wrong by the market.
Let me know if you don’t understand anything and I ‘ll try to help as per my knowledge. Have a great weekend.
P.S:- Try this in a demo account or market replay or simulation before making it as a part of the strategy. It’s not advisable to directly try new stuff during live as it costs a lot of money to learn. Also, this is not for beginners as working with limit orders makes them over trade and put their account at risk.
“Once the bias and the level are chosen, I will wait until the market reaches that level. In other words, I will wait for a counter bias move to reach that level and react when it shows the signs of exhaustion at that level.”
My question is, what is exhaustion? How we know exhaustion occurred or not at a certain level?
That’s where the price interactions that I have given comes into play. Let us say, I anticipated a breakout failure of the level, I wait until price breaks out and see how it is behaving after the breakout. If it immediately got rejected strongly beyond the breakout level (like the one shown in the second trade example), I will place the order at the level with a stop beyond the rejection. If the price is not immediately rejected and showed some acceptance, I wait until it gives a BPB of the level and then an FTC to give my entry (the second and third images for BOF in the price interactions article). It just depends on how the price is behaving at that moment while interacting with the level.