Steeper Trend Line Trading With V-Power (Pump And Dump)
There are many day trading systems that claim to make you a successful trader. Many day traders can make profits but keeping these profits consistent is a big challenge.
Unlike many other trading systems, you might have come across, this day trading pattern will make you consistent and successful as a day trader. This trading strategy is based on a trading pattern that is commonly recurring across all liquid markets.
If you didn't download the Free version of the V-Power EA yet, then you can do it now before you read on:
With our V-Power day trading system we make use of the 1-hour time frame chart.
Therefore, you can expect to see many trading opportunities. So, whether you are aspiring to be a full-time trader or trading just part time, this trading system will guarantee you success, if you practice and get familiar with this type of trading.
Here is a basic chart setup illustrating this trading pattern. You will get a basic idea of what I’m talking about.
As you can see, we make use of only the trend lines. No complex indicators to use.
The chart is as simple and clean as it can be.
A trading pattern that works in the long term and short term
What is unique about this trading system is that it works on both the short-term charts as well as the long-term charts. Therefore, you can identify opportunities at various intervals.
Looking back to the original screenshot, you can see that the pattern was identified on the H1 time frame. It only takes a few days for the pattern to develop and once the setup is formed, the profits are realized within a single day.
But before we get into the details, it is important that you should understand the context and the background.
Many times, traders focus on the signals without understanding why those signals occurred.
When you have a better understanding of the reason behind a pattern, you will immediately see that you will trade more objectively and with lesser emotions.
So, what’s happening behind the scenes?
The Pump and Dump scheme
You might have come across the phrase Pump and Dump. This is nothing but smart money accumulating positions in a trend. This leads many retail traders or the herd to follow the trend.
Once enough positions have been accumulated, the smart money simply dumps the asset or the instrument. This is what is referred to in the financial markets as a bubble.
Bubbles happen all the time and this is more relevant in the currency markets. You might be misled into believing that pump and dump schemes are mostly for major assets. But if you look around you will see that this is a common practice.
The most high profiled pump and dump scheme in recent times is the crypocurrency markets.
The chart below illustrates the anatomy of a pump and dump scheme from the perspective of the cryptocurrency markets.
It wasn’t long ago that the cryptocurrency markets were making big news.
As Bitcoin and other cryptos surged to new highs, many gullible traders were drawn into the rising trend. The promise of getting rich eventually saw the smart money dumping the asset.
The bubble, in the above example of the cryptocurrency markets appeared over a period of years. It gained prominence only in the beginning of last year as the asset surged to new highs. Many poor traders ended up buying at the highs :(
If you were to trade such a pattern, without knowing what was going on, chances are that fear and greed would play havoc with your trading.
The most important thing to remember is that this pattern appears on smaller time scales as well and is evident in the currency markets.
Now comes the question: How do we take advantage of this pattern and be successful at it?
When looking at the smaller time scale, the duration of the pump and dump scheme occurs only within a few days. You can apply this method to the forex, futures and even the cryptocurrency markets if need be.
The patterns appear with relatively high frequency, so you will never be short of trading opportunities with this system.
Why is this day trading pattern as valuable as gold?
If you find yourself asking this question, it is very normal. This pattern is valuable as gold because it is one of those few patterns that constantly repeat in the financial markets.
Depending on the time scale of your interest, you can find this pattern occurring every few days to every few months if you are looking at the higher time frame charts.
The bottom line is that this pattern allows you multiple trading opportunities. If you are patient enough to wait for the signal to occur, then you can be sure of making consistent profits with this trading strategy.
Therefore, it is in your best interest to learn this trading system.
In the next section, I will explain what you need to learn with regard to this very successful day trading system.
Learning the successful day trading pattern system
Let’s break down the system into five steps.
Yes, it is really that simple!
But bear in mind that you need to practice this method to perfect the art of detecting the best setups and patiently waiting for the right signal to occur.
The five steps in this day trading pattern system are as follows:
Step 1: How to detect the pattern?
Step 2: How to validate the pattern?
Step 3: Real Chart Examples to get you started
Step 4: Trade long and short--the setup occurs in all directions!
Step 5: Conclusion and final notes
Let’s get started.
Step 1: How to detect the pattern?
What makes this trading system so simple is the fact that it is also easy to spot. You don’t need any sophisticated trading systems. Just train your eyes to spot the pattern and that’s it.
The starting point in the chart setup is to look to the one-hour time frame chart. The next step is to plot a trend line.
Let’s take an example of a short setup.
For this, you will need to find a liquid instrument that is in an uptrend. Therefore, you will draw a rising trend line.
A typical trend line is often at an angle of 45 degrees with some amount of flexibility. This trend line is your first point of reference.
As price progresses, you will need to draw a second, smaller trend line. This second trend line is steeper compared to the first. It is also the smaller of the two.
By the time you spot the second trend line, you will notice that price has deviated away from the main trend line very sharply.
This creates a free space between the main/major trend line and the smaller trend line. The next chart shows this illustration.
The free space that you see on the chart is basically your profit potential.
This is where a successful setup will reward you with good profits. If you haven’t noticed yet, an important thing to remember is that there should be a decent free space between the trend lines.
If your second trend line is very close to the major trend line, then your profit potential will be small. It is best to avoid such setups.
In the above chart, the vertical dotted lines are the time period separators. For clarity, we make use of a GMT broker. The lines indicate the start and end of a day’s trading session, with 24 candlesticks (one -hour) in between.
Now that you’ve plotted the trend lines, the next step is to validate the setup.
Step 2: How to validate the pattern?
To have a valid setup for this day trading pattern, it is important that price should close near the high or the low at the end of the day.
Look at the next chart below to understand what we mean.
In the first chart, you can see the major trend line. This is followed be a smaller but steeper trend line.
Price also closes near the high of the day. This is a valid setup for a short position.
There are two things to look for here:
1. The validation of the pattern
2. That there is enough free space between the trend lines
On the following day, (most often during the Asian trading session) you will see prices trading flat.
There is a lot of consolidation and price does not make any significant highs but trades within a range.
This is shown in the next chart below.
The first couple of 1-hour candlesticks are trading sideways and do not make any new significant highs or lows.
This is a signal for you to be ready for a potential trading opportunity.
After the Asian session’s tight range, you can often expect price to breakout. Usually, the breakout happens to the upside first.
This is to fool traders into believing that the uptrend has resumed. But be aware of this trap!
After the fake upside breakout near the top, price quickly reverses direction and breaks out to the downside.
When the range’s low is breached, this is your time to enter the market on the short side.
The next chart below shows how the pattern forms once your chart setup is ready.
Now referring to the next chart, which is a real price action example, you can see how price makes a fake upside breakout and then reverses direction to post a sharp and a rapid decline.
The below chart you are looking at is a EURUSD 1-hour time frame chart.
Did you notice the strong downside momentum when we identified the signal?
Step 3: Real chart examples to get you started
Let’s look at some more examples to train your mind into identifying this setup.
Most recent real time trading setup:
The next chart below is an actual example on the USDJPY 1-hour time frame chart. This signal was announced in our Telegram group hours before the entry signal was triggered.
So, you can be sure that this is a system that works in real time.
In the above chart, you can see that few days before, the major trend line was drawn. After this, the second trend line was drawn, which was obviously steeper, and it was alerting us to the potential trade.
In this chart, I also make use of the V-Power Expert Advisor.
This is designed to automatically alert you and to automatically enter the trade when the signal occurred. But of course, you can do this manually too, if you don’t mind staring at the charts for long periods of time.
The next chart shows the red line where the setup appears. It is now time to trade!
And how did this signal perform?
Look at the next chart.
Step 4: Trade long and short – The setup occurs in all directions
It shouldn’t take much to realize that you can use this trading system to trade both long and short positions.
Let’s look at some more examples with trades in different directions.
Example 1: The most recent long setup on gold (XAUUSD)
Example 2: A Long Setup On EURCHF
Step 4: Conclusion and final notes
So, do you want to save yourself from years of pain? Jumping from one trading system to the next while still struggling to make profits?
Then why not invest some time into this free trading system and learn to be a consistently profitable day trader?
With downloading the FREE version of the trading system, you also get access to our Telegram group, the only thing you will be investing is some of your time for your own interest.
You can also apply what you learned above and check a few charts randomly. You will be surprised at the efficiency of this trading system pattern.
In this article, I talked about how to take advantage of this pattern and the reasons why this pattern forms. I did not fully explain the insights behind this pattern. You can read an in-depth explanation of how the smart money operates and why it works.
What’s ironic is that the markets “operate this way” and this is the reason why this pattern will never get old and you can continue to take advantage of this particular chart setup as long as you are trading one of the liquid markets.