Using the higher time frame chart without actually having to look at it.
I am referring to what we often call “The Purple Trade,’ which is a specific Counter Punch Trader setup that few completely understand and as a result, it often intimidates new Counter Punch users. Yet it continues to deliver the goods, and the last couple sessions on the YM offers some excellent examples (see below). If you take the time to learn this trade, you will see HOW it works, and WHY it is so effective.
First of all, let me explain a little bit about the setup. The purple trade takes advantage of an ‘exhaustion level’ on a ‘higher timeframe chart,’ but ON the actual chart we would use to trade. Moreover, it is dynamic in that the ‘higher timeframe chart’ it would be ‘referring to,’ is based on actual price action itself. In other words, it is NOT a specific timeframe. It is just a ‘higher’ timeframe of some sort. The below example will hopefully better explain this interesting concept. We’re using a 377 tick chart to trade off of but the higher timeframe chart we will look at is a 5 minute chart.
Example 1 shows a chart pattern that happens all the time, on all timeframes. I have color coded each part of the example so you can easily follow the sequence. The first four examples refer to trades that happened on the YM yesterday, and led to the tradeplan finishing strong, with a positive result and all new equity highs for the life of the tradeplan.
This is a 377 tick chart. The bars have nothing to do with time but for the sake of this example, you can assume each bar takes about one or two minutes to form during this part of the session.
This example shows the exact same price action but on a ‘higher timeframe’ chart. It’s a basic 5 minute chart. Keep in mind, we are trading off of the above chart but I wanted you to have a clear look at what is happening on the higher timeframe chart so you can see how we use the purple trade (third example below).
This 3rd example is another look at the same chart in the first example, the 377 tick chart, but this time, you see the purple trade presenting a perfect short trade due to its unique ability to take advantage of ‘higher timeframe’ failed exhaustion levels. This setup as well as the other CPT setups are described and taught in great detail with the Counter Punch Trader training.
A 2nd purple trade, using the same principals appeared immediately following the first example for another perfect trade.
Then, today, these trades happened to also finish another winning session and new equity highs (on both the YM and TF).
Today’s TF Trade also took advantage of the Power of Purple
The Counter Punch Trader takes advantage of smart chart patterns that produce profitable setups. It puts the odds in our favor on every trade. Moreover, it does so by simplifying what we actually base our decisions on. We don’t have to look at the higher timeframe chart (we can if we want) because the ‘power of purple’ does it for us. Hopefully I have been able to describe how this effective setup works and that you will be able to use this idea with your own trading.
You will can learn more about my trade ideas, as well as gain insights from other professional traders by downloading the new book I am in:
Expert Trading Systems: Successful Traders Share Their Secrets
You can download it free at Amazon here: amzn.to/2cqcYr8. If you like it, please leave a positive review. Thanks!!