Trading Strategy - The Holy Grail Trading Setup
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- เผยแพร่เมื่อ 24 ก.ค. 2024
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Trading Strategy - The Holy Grail Trading Setup www.financial-spread-betting.c... PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! In this video, we review the famous "Holy Grail Setup" used by market wizard, Linda Bradford Raschke featured in Jack Schwager’s book, The New Market Wizards.. It aims to catch retracements on strong trends.
The “Holy Grail” setup was developed by Linda Bradford Raschke and Larry Connors who named it so for its simplicity. The trading strategy is designed to catch corrections in markets that have shown evidence of increased momentum, with the average directional movement index (ADX) and a 20-day exponential moving average (EMA) providing the setup.
This trading strategy or pattern utilises Welles Wilder's ADX (Average Directional Index), which basically takes into account the strength of a trend over a set period of time. The ADX will read higher for stronger trends. This pattern takes into account that the chances are high that when a stock reaches a new momentum high and pulls back, it will likely retest the recent high. As such any
pullback from a new momentum high can be bought because a top may be in place. With this strategy, chances that a top has been reaches is likely only 5% to 10%. If you check for individual shares that have rises in the last months you'll see that a number of them have had Holy Grail patterns.
With the Holy Grail pattern, we want the stock to fall back to a 20 day moving average after its ADX indicator has moved to a value above 30
Holy Grail Pattern Buy rules (sells are reversed)
1. The 14-period ADX must initially be greater than 30 and rising.
2. Look for a retracement in price to the 20 period exponential moving average. This will usually be accompanied by a turndown in the ADX.
3) When the price touches the 20 period moving average, put a buy stop above the high of the previous bar.
4) Once filled, enter a protective sell stop at the newly formed swing low. Trail stops as profits grow.
The indicators you need for this strategy are:
3-10 oscillator. It is the difference between a 3-day simple moving average and a 10-day simple moving average. Plus, there’s a second line which is a 16-period simple moving average of the 3-10 line. You can simply alter the settings for an MACD (moving average convergence-divergence indicator), changing the moving average type from exponential to simple and the moving average lengths to 3, 10 and 16. For forex traders, we provide the MACD-SMA indicator here.
14-period ADX (average directional movement index). This indicator is used to gauge trend strength.
20-period Exponential Moving Average
Her rules for going long are as follows:
1. Wait for the ADX to rise above 30
2. Buy the first retracement to the 20-period EMA
3. Look to exit on the push to new highs
The best setups also have confirming factors such as the 3-10 oscillator making new momentum highs.
Her rules for going short are as follows:
1. Wait for the ADX to rise above 30
2. Buy the first retracement to the 20-period EMA
3. Look to exit on the push to new lows
The best setups also have confirming factors such as the 3-10 oscillator making new momentum lows.
This strategy is definitely interesting to us. With the clear take profit level of the last high/low respectively if you buy/sell, you can consider setting a stop loss level of the same absolute magnitude, for a 1:1 reward to risk ratio. With such a reward to risk ratio, you will require a higher win ratio. Let us know how this system works for you, especially if you know of any ways to increase the win ratio.
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Mind you, Linda says she trade around models then add discretion to it. Approach the holy grail the same. Her webinars on YT are awesome and I re-watch them constantly.
Hi Mark. Great video as always. What are the other videos called that you have done in Linda's strategy, and where can I find them please. P.s Halfway through New Market Wizards. Very good read. Would highly recommend it.
I salute you for all your videos
Hey Mark, that short would have worked. You have your buy stop in the correct place to go short. That wonky candle opened green around 1.10, spiked up and then triggered your buy stop to short and then closed. All good. Linda trails a stop on this trade. No need for a target. If you're not into trailing you have a doji and a high wave candle at the bottom that would be a good place to exit if conservative. If not the high wave then the candle after which broke two anchors to the left of it.
I wonder if you get views for me playing back certain parts and taking about 30 min to get everything out of it. So much information this is AAA+++ stuff thank you.
I notice on the charts we are looking at are on daily timeframes. Can this be used on lower time frames like 15 minute?
please make a live video using this please..................your the best....
Hi!
If I want the truth and honesty about something in trading, I trust you more as a trader than I trust my doctor as a patient.
I greatly appreciate your ongoing videos on everything trading related - honestly.
Is there an alternative for adx?
For long when the candle touches the 20EMA, the buy stop on that candle's high is valid only for one day ! At maximum you can scale down the entry, mean if the following candle doesn't break the signal's high, the high of the candle becames the new buy stop level, and so on, but the adx must be above 30. You can't buy say 20 bars after, af that level, maybe with prices going up and down ! Where did you read it ? Check the book !
Hi. What could you use instead of the adx?
richard wharton
Hmmm im only a couple weeks into forex and im pretty sure the adx is the only tool that can spot trends, i believe its the only thing you can use? Besides a harmonic scanner? Not sure :p
I think the 20 ma is not enough to tell you where the trend is really going. I find that when dmi+ is above dmi- that the trend is going up.
yes I ilke this kind of stuff
Hi mate what chart are you using and broker thanks?
See www.financial-spread-betting.com/spreadbetting/compare-spreads.html I would suggest Bux Markets or Trade Nation
UKspreadbetting thanks have you ever thought of mentoring
Bilal Patel---Looks the same as Tradingview.
Subscribed already... Please use brighter background for the chart.. Can't see your adx line...
Holy grail ... insight and or a better view for the short term / swing trade & scalp. If that's the point well thank you for the reminder; sure can use it. Later
but this is for a dalily trades, it took too long for FTSE ,,,7 days....what about testing this on a one hour
Thanks for vid. Unable to see you ADX clearly.
I think you should specify, this should be traded in an uptrend
Once strategy like this becomes widely known, isn't it then exploited for profit on opposite side?
nice but....there are other simpler strategies
Kiko, So what?
yeah test this over 80 pairs over a 12 month period.. then i will take you seriously! (i know its naff)