Robo Strategy

Robo Strategy Education

These mechanical CFD trading strategies Robo1 & Robo
form a simplified end of day cfd trading strategy that has all the trading rules build in,
that is, entry, stop, trailing stop and exit.

Robo Strategy Education Topics:

The Day Trading Systems • Psychology of Systems • Rules & Tactics •  Day Trading with Daily Robo – FAQs

Start with Robo2 because its the most simple before moving onto Robo1.

Videos + Guidance

01. The Day Trading Systems

If you wish to refine the methods then watch the video on the TradingLevels and Reading Volume. The main trick in using the Robo System is finding a stock that moves in a smooth manner, not choppy. They are out there, so happy observations!

 

Robo System1 (RS1)

It is suited for CFDs and not shares, simply because it trades both long and short, in fact instead of having stop exits, it has Reverse Position. This simply means that if you are long then you would switch and trade short, or if you were short then you would switch to long. So instead of having an exit stop you would change directions, you would do this by having a order size that is double, that is if you were long 1 CFD then instead of having a stop of 1 CFD you would Sell 2 CFDs, this way you would be short 1 CFD.

This system is essentially running all the time; we only use it on certain stocks at certain times.

If you’re just starting then you may find the Daily Robo System 2 or the Daily Switch System 1 easier or even easier still is the Weekly Robo System 1.

Robo System2 (RS2)

This system can be used for Shares and CFDs, however it does trade both sides of the market long and short, the trades can go from 1 day to 10 days, but 3 days can be the norm. Each day will give you the prices for the trade, entry, the initial stop, trailing stop etc., the trailing stop will be updated each day along with any change in tactics or trade notes. This is a plug and play, set and forget system you only need to place the orders each day with your broker.

02. Psychology of Systems

There is no right or wrong way to trade. Most importantly you need to find a method that suits you.

These systems here are only for busy people who want to trade short term to control the risk, ie, they don’t have time to pour over large watch lists or do the analysis. They also should know that working a system can be against their own human nature, but follow the method and the system. Discipline is vital.

The new trader may have two losing trades in a row and this will knock this person around and then a third losing trade! A disciplined trader will take the fourth trade while an undisciplined trader may not take the next trade. This is one of the hardest things to move through for a trader who wishes to trade a mechanical trading method – surrendering to the system is an aspect you need to think about because its taking away your own opinion of which way you think the market is going.

These methods will have losses, but they are controlled, these systems are designed to keep you on the right side of the market price, these systems have all the trading rules built in except the money management you will need to work out your own position sizing.

 

Disciplined Trader

Having trouble with following trading plan rules?

Use this Trading Focus Exercise every morning before looking at the markets
A 10 minute commentary to develop your attitude for successful trading:
» An Attitude for Trading Successfully, click here to listen

 

Refining your understanding of these Systems!

You can even refine these systems much further by understanding the TradingLevels, reading Volume and understanding the Market Depth.

03. Rules + Tactics

Taking Profits

Profit Targets

- See the TradingLevels concept: TRADING LEVELS

 

What price should I take profits at?

The average trade is 3 to 4 days, so build the profit targets and money management around this.

What is the Average True Range of the stock (ATR) if the trade is 3 or 4 days then you would want to lock in profits each day inline with the ATR, this is just a guideline, the next aspect are the whole numbers then even numbers as targets, so if you're trading a stock that is 20.00 then the targets could be 21, 22, 23, 24... especially if your ATR is 80 cents, or if you're trading a stock at 2.00 then 2.10, 2.20, 2.30 would be the answer, working the average and taking profits at certain numbers offers more control over the trade.

 

Adding & Subtracting Positions

New bar high or low

When the close passes the Open

Open passes close of previous day

Use SG1 & SG2 for Adding & Subtracting positions

It’s safer to take profit at SG1 & SG2 rather than on the Dollar

Add to increasing volume in either direction

 

Intraday Profit-Taking Guidelines

– Mainly for traders watching intraday prices

25% Level 72/80 SG2

25% Midpoint

50% Every one dollar

100% MediumLevels

100% MajorLevels

 

Profit Targets - What does 33% or 50% mean?

If you are long with 300 Share or CFDs then 33% is equal to 100 shares CFDs to exit at that price.

Why would you sometime have 25% or 50%?

The amount to exit would come from a charting technical point of view, if the exit was 25% then we would expect the market to move higher, but would like to lock in a profit to make the trade breakeven, a free trade.

A 50% exit would reflect a stronger resistance or support price point.

 

Placing entries and stops DMA & MM

Direct Market Markers (DMA) work off the last traded price, plus the order sitting in the market depth.

Market Makers (MM) don’t work off the last traded price; they will either work off the Bid price or the Ask price.

What does this all mean?

It means if the real market has a low of 9.18, then a MM would take that price as 9.17 this would be working of the Bid price, the same is for the long side, if the high is 9.20 then MM would take that as 9.21.  If you're using a MM then you need to find out if there charting program is based off the Bid or Ask, and example the GFT platform is based off the Bid price.

Capital

How much do I need and how much should I risk per trade?

The first step is paper trading, and the reason for this is to get the Method and the Rules working correctly, so you know what you will do in any circumstances.

While you're practising on a Demo account you are also getting familiar with the trading platform.

Capital $15,000 is a basic minimum amount, especially when you consider you can only risk 1% of your capital per trade, so 15K at 1% is $150 including brokerage.

Learning steps...

1. Understand the basic Robo Mechanics.

2. Learn Robo Defend Tactics, how to protect and reduce.

3. Know your numbers, TradingLevels. What prices can I place stops and entries at?

4. Know how to read the volume with the price bars.

5. Place three months worth of trades into ProfitKeeper (CFD Accounting Program). This will teach you the trading rules and can see the results for yourself. This is a very important step do not miss this step, this is where you get to clarify the whole process.

6. Download a CFD Demo account and practice paper trading, get to know the orders.

7. Money Management

Paper trade on Demo account. This help getting the method right. Work in 33% lots, so the first real money trial can be 300 CFDs or shares, this why you can reduce by 100 lots. Once you have everything working and you feel comfortable with the Robo method, your CFD trading platform and your money management plan then increase to 600, i.e. just build slowly. One question to ask yourself is can my account survive seven losses in a row?

 

Robo Entries

A good understanding of the TradingLevels will serve you well. The Major, Medium, Minor and Sublevels need to be understood. With the larger TradingLevels you should reduce your position sizing as large numbers can course choppy price action. But what we are talking about here are the entries and this is more to do with the Minor and Sublevels pricing. Most people think in whole numbers and even numbers. These numbers are where most traders will be placing entries and stop so this is not where you should be placing your entries and stops. You need to be either above or below these numbers. This is not the answer to trading but it may, over time, help improve your trading results.

Let’s start with the basic: we say that 10, 20, 30, 40, 50, 60, 70, 80, 90, 100 are the whole numbers people think of the most, and the second level down is 5, say, 15, 25, 35, 45, 55, 65, 75, 85, 95. Many times a high for the day will be at these types of numbers. The next significant trader-trigger-numbers are even numbers such as 8, 18, 28, 38, 48, 58, 68, 78, 88, 98. That’s enough for now... you get the idea.

So let’s say we are looking to go long and the high is 2.20, the general long entry rule is 1 point above the previous high so in this case the entry would be 2.21 and the importance of this is that all the sellers would be at 2.20. So if we bought at 2.21 that means all the sellers in that area have been taken out and this increases your chance of getting into profit from the start. You would now know the degrees of risk that await you and the main one is 2.30 but there are some degrees of risk between 2.20 and 2.30 such as 2.25 then 2.28 and so on. They are like all prices – degrees of risk – and this is what we are managing.

Let’s stay with the same example but change it slightly. Let’s say the previous high is not 2.20 but 2.17. We know all the sellers (supply) is sitting at 2.20 and if we bought at 2.18 the sellers may win at 2.20 and the price trend can fail. Essentially we would be taking on too much risk, so the entry would still have to be at 2.21. I also would like to point out that the 2.18 is an even number and people will be thinking more about 2.18 rather than 2.17 and 2.19 so there is a double whammy here at 2.18 and 2.20. In fact the number 8 is what we call a profit taking number.

When working entries for larger stocks say 30.00 then we break down the price with the Sublevels that is, we look inside each  one dollar, so you need to study the Sublevels. Briefly I will explain: within each one dollar there is  Subgroup1 (SG1) 10, 20, 30 (cents); the Midpoint 50 (cents): and Subgroup2 (SG2) 65, 72, 80.

The important aspects here are the 72 the 50 then 30/20 there is a lot to explain and I’m not going to get into it here, but it’s much the same if the previous high was 31.47 then the entry would be 31.51 or if the previous high was 31.70 then 31.73 is the entry.

And the reverse for going short… if a low was 31.50 or 31.53 the entry would be below the 50, that is 31.49 as you need to clear out the 31.50 support orders.

 

Robo Stops

Most stops should be at the number 3 or 7.

If the previous low is 2.20 or 2.21 then the stop need to go at 2.17 under the buyers that will be at 2.20 and 2.18.

If you wanted to place the stop even lower, then the next stop is at 2.13 which is under the 2.15

04. Day Trading with Daily Robo – FAQs

These Day Trading systems are simple and mechanical – they would suit busy people that would like to trade short term from 1 day to 10 days. The average trade would be 3-4 days.

You don’t need to do any analysis, we give you all the prices necessary to trade every day. If you would like to understand and learn how we do this then we are happy to show you and coach you.

Robo System1 (RS1)

It is suited for CFDs and not shares, simply because it trades both long and short, in fact instead of having stop exits, it has Reverse Position. This simply means that if you are long then you would switch and trade short, or if you were short then you would switch to long. So instead of having an exit stop you would change directions, you would do this by having a order size that is double, that is if you were long 1 CFD then instead of having a stop of 1 CFD you would Sell 2 CFDs, this way you would be short 1 CFD.

Tips for trading

1. Position sizing, the Weekly Robo generally will have wider stops, this means you should get your position sizing worked out correctly, the risk per trade must match your financial planning aims, this is one of the most important aspect of trading, staying within your risk parameters, percentage per trade and position sizing.

2. Gaps. Using the Robo, a DMA provider wouldn’t fill you if the price gapped past your entry or stop, simply because the market never traded at that price, a MM would or may fill you at the next best price.

TRADING GAPS  If the market opens past your stop on the open, don’t just get out, use the 30 minute price bar to either say in the trade or exit. As an example if you are short and the next day the price gaps open higher than the previous bar high and your stop, then wait for the 30 minute price bar to finish then use the Robo method on that 30 minute price bar, in this case if the price moves higher above the 30 minute high then exit, if not stay short. The trade recording on the site will take this into account.

3. Taking Part Profit

Taking percentages of profits; doesn’t have to be right on the a TradingLevel, it can be near a TradingLevel, such as Group1 if your short or Group2 if your trading long.

In fact it’s better to take percentage profits at Groups1 and Group2 rather than at the larger levels, simply because there will be larger order sitting at the larger numbers, Group1 and Group2 are for scaling in and out of the markets

DAILY ROBO GUIDELINES FOR TAKING PROFIT

Cover 50% MinorLevels

Cover 75% MediumLevels

Cover 100% MajorLevels

WEEKLY ROBO GUIDELINES FOR TAKING PROFIT

Cover 25% MinorLevels

Cover 50% MediumLevels

Cover 75-100% MajorLevels

MONTHLY ROBO GUIDELINES FOR TAKING PROFIT

Cover 30% MediumLevels

Cover 50-75% MajorLevels

SubLevels: For more information on the sublevels »CLICK HERE

How to set up orders for DRS1
EDUCATION+TOOLS

Video: US Indices

9 January 2019

Video: Euro Indices

4 Hour

German Dax 4 Hour Chart
Tuesday, 8 January 2019 at 6:32:00PM AEST

German dax unfolded an EW ending diagonal within wave five as part of a bigger, bearish trend. We can see that price seems to have found a low at the 10280 level, from where a nice rally is now developing. This rally can be part of a minimal three-wave recovery, which can take price above the 10987 bullish level.

Video: Asian Indices

4 Hour

German Dax 4 Hour Chart
Tuesday, 8 January 2019 at 6:32:00PM AEST

German dax unfolded an EW ending diagonal within wave five as part of a bigger, bearish trend. We can see that price seems to have found a low at the 10280 level, from where a nice rally is now developing. This rally can be part of a minimal three-wave recovery, which can take price above the 10987 bullish level.

Charts: SP500

4 Hour

German Dax 4 Hour Chart
Tuesday, 8 January 2019 at 6:32:00PM AEST

German dax unfolded an EW ending diagonal within wave five as part of a bigger, bearish trend. We can see that price seems to have found a low at the 10280 level, from where a nice rally is now developing. This rally can be part of a minimal three-wave recovery, which can take price above the 10987 bullish level.

Charts: DAX

4 Hour

German Dax 4 Hour Chart
Tuesday, 8 January 2019 at 6:32:00PM AEST

German dax unfolded an EW ending diagonal within wave five as part of a bigger, bearish trend. We can see that price seems to have found a low at the 10280 level, from where a nice rally is now developing. This rally can be part of a minimal three-wave recovery, which can take price above the 10987 bullish level.

Video: Elliott Wave Basic Pattern Structure

4 Hour

German Dax 4 Hour Chart
Tuesday, 8 January 2019 at 6:32:00PM AEST

German dax unfolded an EW ending diagonal within wave five as part of a bigger, bearish trend. We can see that price seems to have found a low at the 10280 level, from where a nice rally is now developing. This rally can be part of a minimal three-wave recovery, which can take price above the 10987 bullish level.