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Profitable Contrarian Strategy

Zeiierman [read I]. I use this trading setup on a daily basis. This is the strategy I became really successful with. This is a contrarian strategy that works in any market and timeframe. This strategy requires some practice and knowledge about key levels.

  • We recommend using proper risk and money management such as position sizing, stop losses, etc.
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Strategy Idea

  • Settings explained apply to Long & Short!

 

This strategy aims to find Reversals around Key Levels/Zones. Below we have explained how we interpret the Bellcurve impulses and what we see as key levels/zones. In addition to that, we have explained a candlestick pattern that can be used to confirm a Top or a Bottom.

Notice, the idea is not to find all reversals! You will see that you will not catch all of them with this strategy. So do not expect that.

 

Read the 3 sections below before reading about the Entry criteria

    BellCurve Impulse:

      1. The market moves in Impulses. An Impulse can either be a sign of a trend reversal or the very first impulse that triggers a new trend.
      2. You have to understand that market impulses can have different meanings in different situations.

      The BellCurve indicator aims to identify the most significant market impulses.

      Negative Impulse Reversal

      Negative Impulse that triggers a Reversal

      Positive Impulse Trend

      Positive Impulse that triggers a Trend

      Market Structure:

        Make sure that you have a basic understanding of market structure. How support/resistance works and what key levels are. Since this strategy makes use of key support/resistance levels.

        The ideal is to find impulses that break key levels.

         

        Get Started with Key levels

        We know that some users struggle with knowing what a key level/zone is, and we know by experience that it takes time to learn how to identify high-probability levels/zone. It’s subjective and based on experience many times.

        To get everyone started I would like to propose the most simple thing that everyone can keep track of and requires no experience to identify, namely, keep track of:

        • Daily Open
        • Previous Daily Open & Daily Close

        Mark these levels manually on the chart, and try to find confluence and confirm trades around these levels.

        Key Level Zone

        Notice that the level is not exact and what’s important is that price has reacted at this level before with major price moves as result. 

        A key zone to look for impulses!

        Notice that the level is not exact and what’s important is that price has reacted at this level before with major price moves as result. 

        2B Bottom Reversal & 2B Top Reversal Candlestick Pattern:

          If you want more confirmation you can use this candlestick pattern.

          This pattern has to happen within 1 – 10 periods to be valid.

           

          BellCurve Setting

          • Use the standard settings if you want to find the most significant market impulses.
          • Enable “Activate BellCurve Sensitive” under section 2.1 if you want to find almost all impulses.

           

          —————————-
           I use the Sensitive BellCurve since I want to have the most aggressive entries! Thus I filter out some of the Bellcurves manually based on my market experience and the way I interpret different levels/zones.

           

          With the settings above your chart should look like this!

          Best Top & Bottom Indicator

          Entry

          If you want to have a great intraday setup follow these rules

          Step 1: Map out key levels in the 1-hour chart! 

          Step 2: Look for BellCurves in 15 min, 5 min, or 1 min Chart around these Key Levels.

          Long Entry

          Once you have mapped the Key Levels in a higher timeframe you look for the following in lower timeframes:

           

          1. Once the Red Bellcurve starts to form we know that we’re in a negative impulse and we want to find our Low. The Low is confirmed when the Bellcurve starts to decline. When you see that the BellCurve declines you can draw a line at the lowest low on the chart.

           

          2. Our Long Aggressive Entry is when the price breaks down the previous low and we can enter long at the very first Green Candle.

           

          3. Our Confirmed Entry can be when the 2B Bottom Reversal Pattern occurs.

          Long Entry

          Short Entry

          Once you have mapped the Key Levels in a higher timeframe you look for the following in lower timeframes:

           

          1. Once the Green Bellcurve starts to form we know that we’re in a positive impulse and we want to find our High. The High is confirmed when the Bellcurve starts to decline. When you see that the BellCurve declines you can draw a line at the highest high on the chart.

           

          2. Our Short Aggressive Entry is when the price breaks up the previous high and we can enter short at the very first Red Candle. This didn’t happen in the example below! So we are flexible and see that a potential double top occurs and we want to enter short when this structure breaks.

           

          3. Enter Short when the Double Top Structure breaks.

           

           

          This example illustrates that if we don’t get our ideal Entry Condition we can still use other methods to confirm our entry. As a trader you won’t be able to find the perfect setup all the time, we have to have a flexible mind and adapt to the current market characteristics. 

          Short Entry

          Exit and Stop Loss

          We recommend exiting your positions in 2 steps, first, we bank some profit at the nearest swing high/low and make a full exit when the opposite BellCurve occurs.

           

          • Take Profit Long – At the nearest swing high
          • Take Profit Short – At the nearest swing low

           

          • Exit Long – When a Positive BellCurves occurs
          • Exit Short – When a Negative BellCurves occurs

           

          Since we aim to enter at key levels from higher time frames the price can bounce back and forth before taking off. So the stop loss should be in accordance with the current volatility.

           

          • Long Stop-loss – Slightly under your entry!
          • Short Stop-loss – Slightly above your entry!

            Example: Long Entry 

              Example Long

              Example: Short Entry

              The arrow on the chart below should be pointing to the red candlestick.

                Example Short

                We hope that you gonna find this strategy valuable! If you have any questions or suggestions on how to make it even better please let us know!

                Disclaimer

                Copyright by Zeiierman.

                The information contained in my scripts/indicators/strategies/ideas does not constitute financial advice or a solicitation to buy or sell any securities of any type. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.

                All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.

                My scripts/indicators/strategies/ideas are only for educational purposes!