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2. Trigger - Waiting For A Pullback

In the 4 T’s trading system video we use the RSI (5) daily overbought/oversold for the trigger


All trends will offer pullbacks or chances to get in at a lower price (higher price in a down trend) as long as the trend is still valid. Someone once said “Just buy the dips (pullbacks) of an uptrend and sell the rallies (pullbacks) of a downtrend and you’ll only be wrong once, when the trend ends!”

A trader needs some way of being alerted to a pullback and when it might be about to end. There are many tools that do this and they include technical indicators such as moving averages and oscillators, chart patterns, candlestick patterns, Fibonacci, support and resistance, trend lines, waves, and breakouts to name a few. There are endless varieties available to the trader so we’ll cover the basics for the mechanical trader and look at some discretionary types too.

We suggest the following tools:

  • Moving averages
  • MACD
  • Stochastic
  • RSI
  • Bollinger bands
  • Fibonacci
  • Support and resistance
  • Trend lines
  • Divergence
  • Volume
  • Price Bar Patterns
  • Breakouts

Note: The ‘trigger’ process and the ‘trade’ process can be interconnected. For example, a trader may use two (or even more) of the tools we are about to suggest, one for the trigger and one for the trade event and this is perfectly fine. Although the trade process looks for a specific event to actually force a trade, the trigger process is supposed to come first and alert you to watch for a trade event.

For example, if you use event A as your trigger, and event B for your trade, event A says ‘once triggered, lookout for event B to occur’, where as event B tells you to enter the trade.

But you could actually use one event as both your trigger and your trade if you wish. This will become much clearer by the time you have finished both ‘trigger’ and ‘trade’ modules.

With the all the indicators you're about learn, the variables you use depend on the time frame you are trading and more importantly the style of trading. An income trade will be looking for shorter term trades compared to the growth trader, usually requiring smaller variables.

 

 

Move on to Step 4 - Module 2 > Trading System Builder Tool Kit: Trading Rules > Trigger: Moving Averages

 

  

____Step_1____
Welcome
Binding Agreement
____Step_2____
Your Trading Business
□ Trading Styles
□ Objectives
□ Business Resources
□ Business Assets & Liabilities
____Step_3____
Market Basics
□ Stocks
□ Forex
□ Futures
□ Options
□ CFDs
Trading Basics
□ Reading Price Charts
□ Types of Markets
□ Types of Trading
□ Placing Orders
____Step_4____
Charting Basics
□ Pivot Points
□ Trend Points
□ Isolation Points
□ Real Bars
□ Summary & Test
□ Answers
Trading System Builder Tool Kit
□ Trading Rules
□ -1 Trend
□ _Moving Averages
□ _MACD
□ _Trend Lines & Channels
□ -2 Trigger
□ _Moving Averages
□ _MACD
□ _Stochastic
□ _RSI
□ _Bollinger Bands
□ _Fibonacci
□ _Support & Resistance
□ _Trend Lines
□ _Divergence
□ _Volume
□ _Price Bar Patterns
□ _Breakouts
□ _Which Triggers To Use
□ -3 Trade
□ -4 Terminate
□ _Initial Stop Loss
□ _Exit Strategy
□ -Filters
____Step_5____
Risk Management
Back Testing & Evaluation
Running The Business
Additional Tools & Resources
Resources