Trading Strategy for Parabolic Markets [Part 1]
I recently watched this podcast with Tone Vays. Tyler Jenks was the guest and he started out by saying:
"This is the greatest opportunity I have seen in financial markets."
It just so happens that I have been studying parabolic theory as it relates to hyperwaves. I am using that information to develop a trading strategy that is aimed towards capitalizing on parabolic moves. I will be using Tyler Jenks' hyperwave and consensio theories, Welles Wilder’s RSI, ADX and Parabolic SAR indicators, as well as Parabolic theory from Spyfrat’s Call. The TD' Sequential and Ichimoku Clouds will also be used to a much smaller degree. Below I have outlined the indicators/theories that are being used, my approach to entries, four options for a trailing stop loss in a parabolic market and a rudimentary price target calculation.
If you are not interested in the minutia of my approach then feel free to skip straight to part 2 where positions will be outline. I have identified 5 stocks that are currently in a parabolic state and one that is primed to start one. Entries, stop losses and risk:reward calculations are provided for each. Three strategies for implementing trailing stop losses have also been included.
Consensio
Used to identify bull and bear markets. If price is above the MA’s and the shorter term MA’s are all above the longer term MA’s then it is a bull market. If the price is below the MA’s and the shorter term MA’s are below the longer term then we are in a bear market.
Hyperwave
Parabolic Burst Continuation
30-prd RSI is used rather than the more commonly used 14-prd RSI
If 30-prd RSI reaches 70 level, stock is in parabolic status
The best setup is when both Weekly RSI and Daily RSI reach 70 with the weekly RSI > Daily.
If both weekly and daily RSI are in parabolicy state but the daily RSI overtakes the weekly RSI the asset is said to be in a ‘Parabolic High Risk’ (PSR') state. Indicates that asset is at a high risk of a major correction (paraburst)
If both weekly and daily RSI > 80 (regardless if w > d), the asset is said to be in ‘Extreme Parabolic High Risk’ (ePHR) state.
Source
ADX and DI
ADX measures the strength of the trend. If < 20 then no trend exists. If > 25 then strength of trend is building. Horizontal lines can be drawn on the ADX to indicate when the move is becoming exhausted.
Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI), together these measure trend direction. If +DI > -DI then trend is bullish. If +DI < -DI then trend is bearish. Crossover in the -DI and +DI can indicate a change in the market trend.
Entries
I will always line out a minimum of three entries. That is because I believe in entering into positions in thirds or fourths, only adding when the price moves in my favor. This allows me to minimize risk and emotional decision making.
Trailing Stop Losses
Bill Williams Fractals - Set slightly under most recent down fractal (if long).
Parabolic SAR - Set slightly under most recent weekly SAR' or slightly under the previous 2 daily SARs.
ADX - If > 50 on weekly and/or > 60 on daily
RSI - If weekly and daily are > 80
Price Targets
This is still a work in progress. I have noticed that each phase tends to go +90% - +95% from prior phases high. That can be used to give us a rough idea in order to calculate the risk:reward, however there is a lot more backtesting that still needs to be done. If you have significant data about the % ROI' each phase will return on average then I would be very interested in collaborating!
Now that you understand the approach be sure to check out part 2 where 5 possible possible positions are outline
"This is the greatest opportunity I have seen in financial markets."
It just so happens that I have been studying parabolic theory as it relates to hyperwaves. I am using that information to develop a trading strategy that is aimed towards capitalizing on parabolic moves. I will be using Tyler Jenks' hyperwave and consensio theories, Welles Wilder’s RSI, ADX and Parabolic SAR indicators, as well as Parabolic theory from Spyfrat’s Call. The TD' Sequential and Ichimoku Clouds will also be used to a much smaller degree. Below I have outlined the indicators/theories that are being used, my approach to entries, four options for a trailing stop loss in a parabolic market and a rudimentary price target calculation.
If you are not interested in the minutia of my approach then feel free to skip straight to part 2 where positions will be outline. I have identified 5 stocks that are currently in a parabolic state and one that is primed to start one. Entries, stop losses and risk:reward calculations are provided for each. Three strategies for implementing trailing stop losses have also been included.
Consensio
Used to identify bull and bear markets. If price is above the MA’s and the shorter term MA’s are all above the longer term MA’s then it is a bull market. If the price is below the MA’s and the shorter term MA’s are below the longer term then we are in a bear market.
Hyperwave
Parabolic Burst Continuation
30-prd RSI is used rather than the more commonly used 14-prd RSI
If 30-prd RSI reaches 70 level, stock is in parabolic status
The best setup is when both Weekly RSI and Daily RSI reach 70 with the weekly RSI > Daily.
If both weekly and daily RSI are in parabolicy state but the daily RSI overtakes the weekly RSI the asset is said to be in a ‘Parabolic High Risk’ (PSR') state. Indicates that asset is at a high risk of a major correction (paraburst)
If both weekly and daily RSI > 80 (regardless if w > d), the asset is said to be in ‘Extreme Parabolic High Risk’ (ePHR) state.
Source
ADX and DI
ADX measures the strength of the trend. If < 20 then no trend exists. If > 25 then strength of trend is building. Horizontal lines can be drawn on the ADX to indicate when the move is becoming exhausted.
Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI), together these measure trend direction. If +DI > -DI then trend is bullish. If +DI < -DI then trend is bearish. Crossover in the -DI and +DI can indicate a change in the market trend.
Entries
I will always line out a minimum of three entries. That is because I believe in entering into positions in thirds or fourths, only adding when the price moves in my favor. This allows me to minimize risk and emotional decision making.
Trailing Stop Losses
Bill Williams Fractals - Set slightly under most recent down fractal (if long).
Parabolic SAR - Set slightly under most recent weekly SAR' or slightly under the previous 2 daily SARs.
ADX - If > 50 on weekly and/or > 60 on daily
RSI - If weekly and daily are > 80
Price Targets
This is still a work in progress. I have noticed that each phase tends to go +90% - +95% from prior phases high. That can be used to give us a rough idea in order to calculate the risk:reward, however there is a lot more backtesting that still needs to be done. If you have significant data about the % ROI' each phase will return on average then I would be very interested in collaborating!
Now that you understand the approach be sure to check out part 2 where 5 possible possible positions are outline
emasar Indicator is available for purchase at alphanalysis.io/product/emasar/
Part 3