Quadra Safe Strategy–Part 2-ii

Part 1 can be found at Let the Charts Speak....: Quadra Safe Strategy–Part 1

Part 2-I can be found at Let the Charts Speak....: Quadra Safe Strategy–Part 2-i

Well, till now we are clear about the swing high/swing low and how to enter into a position based on Quadra Safe Entry strategy, explained in Part – 2-i.

The stop loss is placed at the previous swing low (for a long position) and as the market moves up, the stop loss should be trialed.

The criteria for moving a stop loss from one point to another is that,

- If there is another candle forming a swing low(without a downward tilt in the WMA-50), then the stop loss is trialed to that point and the stop loss order will be changed to that point. That can be seen in the Chart below.

As evident from the chart above, The Initial stop loss is setup at the previous swing low before we take a long position.

As the market progresses, the stop loss should be moved to the next swing low.

The next swing low is observed at the arrow marked “Trialing Stop Loss – 1” , which is a swing low. The low of the red candle is lower than both the green candles on either side of it.

The market hasn’t touched that low again and then progressed further (observe that the WMA – 50, green line) is still upward and is indicating bullish.

The market again formed a swing low, (arrow marking “Trialing Stop Loss – 2”), where the low of the green candle over the arrow mark is lower than the lows of the candles on either side.

So, the Trialing stop loss is moved to that point. As such, the Trialing stop loss moves upward whenever a swing low is formed.

Exit:

The exit of a position can be made in 2 ways, depending on the comfort level of the trader in terms of time.

The first type of exit is where a stop loss is hit.

The second type of exit is where the WMA – 50 changes its direction and forms a tilt on the lower side. (Very rarest scenario to happen before the stop loss is hit).

Observation:

As said earlier, when the stop loss is hit, that is the exit point of the strategy.

On the other hand, an exit can be made when the first WMA, i.e. WMA – 5 cuts the second wma, i.e. WMA – 8 from the top side and proceeds to move lower. An avid trader who doesn’t want to risk his profit and get out of the position, can exit at this point, but re-entry into that position again should be made on a cautious note.

The exit point according to my observation is charted below.

The area circled with a smaller red circle on top of the chart is where the cross over happened. The black line is the close of the candle on which day the crossover is made. So, an exit will be made either at that price or lower, whichever is encountered earlier.
Customizing the system to Intraday actually requires a lot of work, on which I am occupied now. The next part with customization of averages and better exit points will be discussed later.