The A setups..

Part 1- BOF
Hello everyone,

Before going into the further topics, I would like to bring some charts into this
series of articles. I have been using the word A setup for a long time, but
never talked much in detail about it. As the charts speak more than theory in
trading related stuff, let me give some of the best BOF trades I have taken in
the last
30 days.
What can you notice in all the above BOF trades?
If I am not wrong, the first thing you notice in those charts is how big the
moves were after the entry, and how strongly they hit the target without
looking back.

But the sad truth is, we dont make money from the hindsight charts. We
have to trade the hard right edge in the chart, and we never know whether it
hits the target or not, whether the move will be impulsive or corrective, etc.

So, as a trader, we should look at the context before the start of that big
move, the level where that big move has started and the behavior of price at
the start of that big move so that we can take chances when we see these
three things in the future. Nothing happens if you say, I could have taken this
move with my skill set and managed it until the end of the move , after the
move has happened. If you could have, you would have. The reason you
missed a trade like that totally says that you didnt see that move coming
with the skill you got and you have got some homework to do if you want to
catch a move like that next time. Damn!! I am moving off the topic. Let me
comeback to the main topic of this article.

The important things to notice in the above charts.

The Ranging trend structure. You have to know when to call a market
as a range, where to draw the range boundaries and what setups to look
for in a ranging market. If you didnt see that as a range and
you considered them as trending markets and pullbacks, you will not get
an idea to fade the move when market reaches the level, and will end up
solacing yourself by saying that I would have got that move if I have taken
a BOF of the swing low in that down trend, or BOF of the swing high in that
 uptrend. You can even add strength and weakness analysis to support
your decision in hindsight saying bulls getting stronger, bears getting
weaker, rejection blah blah blah..Next time you will take a BOF of swing
high in an uptrend, you will end up taking a CT trade and I dont need to
say what a losing trade can do to your performance in the rest of the
session. Trust me. I have seen people like this. Accept this.. If you could
have, you would have. If you are failing to take trades like that more than
once and forming reasons after the fact, you are fooling yourself and you
will not move anywhere. You do the same thing the next time as well..
Harsh.. But true.
Trades started at the range boundaries. So properly defining the range
boundaries is the next important thing.
Trades are taken after the confirmation of breakout failure. ie. after the
second attempt failure to continue after the BPB or strong close against
the breakout beyond the level that is broken out. I didnt try to pick the
exact top or bottom.
Why big targets? Because, in the absence of outside market force, BOF
of one extreme atleast tests the other extreme. But here, the targets are
tentative and I dont have a problem to scale out at the intermediate
levels when the trade turns out to be weak.
Nothing great to talk about the trade management. Its just how we
manage trades conservatively.
Expectations.. Yep.. Very important in every trade. You have to
anticipate how the trade will behave if the premise is valid so that you can
take an informed decision when market is doing crazy things. Ive recently
read a quote from a Buddhism book which I am planning to get tattooed in
the near future that says, Dont react, respond .. I really stopped
everything I was doing when I first read that quote and started thinking
about that. This is what I came up with. Reaction is an instinct that is good
for escaping from accidental situations like a fire burning sensation, or to
catch limited opportunities like scoring a basket in the NBA game in the
last few seconds. Whereas the response is an informed decision we can
take, in a relaxed mindset, not letting the internal hormones distract the
perception. There is no hurry to take instinctive actions in the market as
the opportunities are unlimited, and it is totally ok to miss some provided
the risk is under control and you totally accept that. Even in life for that
matter. You dont need instinctive actions most of the time. I know I am
moving away from the topic again. Lets get back.

Thats it. These above points makes the BOF of the range boundary an A
setup. Does that mean it will give the same type of profits everytime?
Definitely no. But when all these things are in place, the setup got the
potential to give a big move. We just need to manage the trade to make
maximum out of the trade by reading every single candle. A lot of trades
might end up in losing paper profits to give a BE result, or sometimes even a
loss especially when you are at the beginning stages. But thats fine. You will
learn slowly to manage trades like this. But remember, dont just hope for big
targets all the time no matter how strong the setup is. Manage the trade
actively, at least from the TTF chart.

Hope this article gives a brief look into the A setup thing. I will try to bring
examples for the other setups as well when I find them in my trading.

Happy trading,

-Jagadeesh Chandra Kolli.

P.S:- I entirely moved to 5min. chart from 3min. chart in all the markets to
daytrade as candle closes, buying and selling power representation by the
tails are making much sense in 5min charts.

Timing the BOF trade..

Hello traders,

I hope you are doing great. First of all, sorry for deleting the journal section
from this website. I have done that as the results are giving a wrong sense to
the readers. So, I am planning to discuss only about those trades of mine,
that adds some educational importance to you. From now on, whenever I
mention that I have taken a trade in live, I will try to post the screenshot of
the filled orders so that you will understand that the trades are real and that
can be taken in live with practice. So many people might not accept picking
the tops/bottoms with lesser risk, let them be.
Enough with that BS. Lets talk about one of the trades I have taken
yesterday.The timing was picture perfect. First lets look at the structure of
the market in trading time frame. .
Future Bias:- Market is in a sideways range and is trading at the range
resistance. There is no bull strength shown at the resistance. So, as per the
third rule of future bias, sideways environment continues.
Setup:- So, the possible setups are TST and BOF. As there are no evidences
of bear strength, my gut is for a BOF trade. Hence, I have to wait until market
gives a breakout to the upside. Any sign of weakness in bulls after the
breakout is a trigger for my BOF trade.
As expected, market gave a breakout to the upside and immediately got
rejected as shown in the above image. If it fails to continue in the second
attempt, I will prepare my orders to give an entry. This is when my focus
moves to the LTF chart. I need to know how price is going to interact with the
high formed after the breakout, after testing the resistance which is broken
out.
The above image is the LTF chart during the retest of the high after breakout.
Price clearly stalled at the high point, which is 2950. Generally, I pull my BOF
trigger during the second attempt failure. But, this second attempt to move
up was a bit strong. Hence I thought of giving an entry with stop order if that
second attempt fails or I will give the entry with limit order if there is a weak
retest of highs before hitting the LWP of the trade. Luckily, the second
scenario played out.
The high was 2950. My order was at 2949, Stop was at 2952. First target was
2935. Now the risk to reward is almost 1:5 . I anticipated that this weak
retest of the highs might not extend upto the black line. So, placed my entry
one tick below that and it got a fill. Then I cancelled my stop entry order at
the LWP.

This is the outcome of the trade.

Was I 100% sure that this trade gonna work out at the time of
entering the trade?
No.. I just knew that the odds were in my favor of the trade.

Was there a chance of this trade failure at the time of taking it?
Absolutely. My stoploss would have taken care if my premise was wrong.

What were the things that I looked at, while making this entry?
High probable future bias which favored a breakout failure.
Price level that I want to look a bit closely using LTF.
 Weakness and exhaustion against my bias at the price level I am
interested in before placing the entry order.
Minimum risk to reward of the trade.
Market had taken care of the rest.

TSTs and BOFs.. Nothing else..

Hello all,

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. Its 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 in stead 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 doesnt 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 a 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 an
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.

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 orderflow, 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 imgae), Stefan on the same day which I missed out of hesitation.
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 looked 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 the level before
moving in the direction of the bias.

This might look like some complicate procedure for you if you are new to
this, but its not. You just have to make a decision whether its 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 dont understand anything and I ll try to help as per my
knowledge. Have a great weekend.

-Jagadeesh Chandra Kolli.

P.S:- Try this in a demo account or market replay or simulation before
making it as a part of the strategy. Its 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.