Welcome to trade pro after about eight years of trading experience i want to talk about what i believe is the best way to trade now this is going to be a style of trading a sort of strategy with multiple roles that need to be followed now this way ofTrading in my opinion is the best and most consistent way for most manual traders to go about doing their trading personally i have found this to be the easiest way to trade the most consistent and easiest way to stay profitable in the long run so let's talk about it whatIs this strategy what does entail there are multiple parts so bear with me i'm going to get through it one by one first of all we need to decide what our goal is when trading that way we can devise a plan that puts us in that position as best possible soWhen we are looking at this chart when do we want to be entering into a short position well all of these peaks would be the absolute ideal time to enter into a short position and in an uptrend of course you want to enter into a long position atThe bottom of all of the dips expecting a continuation move with the current trend now we have a goal it's to enter in at the tops of pullbacks in a downtrend and buy at the dips and the low of the dip in an uptrend so how can we accomplishThis how can we formulate a strategy that puts us in that position as best as possible well first of all we're going to need to know what the trend direction is and this one is a very simple part of this strategy all you need is a 200 periodExponential moving average which is a time tested method of filtering the trend so what that means is when price is below the 200 period exponential moving average you only look to short pullbacks and when prices over the 200 period exponential moving average only look to long the dipsNow let's talk about how do we know when to enter into that short on a pullback or when do we know when to buy on that dip how do we know that the dip is done how do we know if the pullback is done and the trend is ready to continue soLet's talk about a few more rules that we can add in to help put us in the right position now this next part has multiple layers to it so let's start out with one of the rules that will keep you from entering when price is too extendedTo the downside or the upside depending on the trend direction because we don't want to be entering into a short position right at the bottom here before a pullback we want to be entering in at a discounted price so how do we ensure that we're entering in at a discount soThat we don't get caught on these bottoms right before pullbacks and get stopped out right before the trend continues in our favor well i suggest using some exponential moving averages such as the 20 period exponential moving average in blue and the 50 period exponential moving averageIn yellow the rule here being you're not allowed to enter in until price has pulled back to at least the 20 period exponential moving average this ensures that you're not entering when price is extended off of the emas because when it is extended it's likely already gone too far for you to enterAnd you're gonna have to wait for the next pullback so having a rule that tells you that keeps you from entering when price is to extend it to the downside and a downtrend or to extend it to the upside in an uptrend you want to be getting inAt a discount remember we don't want to be entering at a premium entering into the trend at a discount selling at a premium okay rule here being making sure price is pulled back to at least the 20 period exponential moving average before you start thinking about getting readyTo enter into the trend now the pullback to the exponential moving averages is only the first layer to this part of the strategy making sure you're not entering in when price is too extended making sure you're getting into the trend at a discounted price but you don't want toEnter blindly just because price pulls back into the exponential moving average we have to add some more layers to this so what i suggest is something like a stochastic rsi where we can also make sure that our indicator has fully reset so that price is more likely ready toContinue and fully reset means that it has come all the way back into the over bought territory when price is in a downtrend and an indicator is overbought that is often a good time to be getting in so not only has price pulled back to our exponential moving averages givingUs a discount but price has also caused the indicator to fully reset into its overbought territory another thing that we can talk about here is looking for things like hidden divergence hidden divergence is where price is making a lower high but at the same time an indicator makes a higherHigh an instance of hidden divergence can be seen right here we can see on this pullback the stochastic rsi comes up to here but then on this pullback stochastic rsi has actually come up higher and already fully reset into the overbought territory but price is makingA lower high so we can talk about hidden divergence and waiting for our indicator to fully reset into the overbought territory if it's a downtrend or the oversold territory if it prices in an uptrend of course so this is just another layer that we can add in as confirmation that price hasPotentially pulled back enough that it's ready to continue so that we're not entering into the trend too early and potentially getting stopped out of course you will get stopped out on some of your trades it's just natural as part of the trade any trading strategy but what we want to do is bestDo the best we can to enter in at a discount and this is only the next layer but we have another layer to get into here with making sure the trend is ready to continue and the price is pulled back enough so let's get into that so now that we've determined trendDirection making sure we're not entering when price is already extended and making sure that our indicator has fully reset into the overbought territory or has hidden divergence let's get into a multi-time frame approach so this is another layer to making sure that the pullback is likely coming to an end soonSo what we're gonna do is go down to a much lower time frame and use regular divergence to our advantage in the manner i'm about to show you so dropping down to the four hour time frame here we can then zoom out and look at all ofThese pullbacks on a lower time scale i'm going to get rid of this and i'm actually going to use the rsi instead that way we can use this to find regular bearish divergence which will help us determine when pullbacks are likely going to come to an end so let's take aLook at one of the recent pullbacks that i had circled on the daily time frame which was up here and what we can do is go to our rsi and look for regular bearish divergence on our rsi of the lower time frame such as right here where we seePrice makes a higher high right here but at the same time we have our rsi making a lower high so this regular bearish divergence of a lower time frame can also make sure that we're not entering into a pullback too soon this way we get in at a great price andThis allows us to catch the top of the pullback almost perfectly now if we take a look at some of the other pullbacks along the way yeah we may have a little bit harder to spot regular bearish divergence here but nonetheless we do get it on the fourHour time frame you may need to experiment with different time frames when doing this so maybe go down to the two hour or the six hour or one of the other time frames to determine the best possible entry price but it looks like on quite a few ofThese we get this higher high on price and a lower low or lower high i should say on the rsi which often gives us the perfect entry into this daily downtrend and of course as i just said we can go down to a lower time frame as well and find these regular bearishDivergences to help us join in to this downtrend at a good price now let's circle back and think about what our original goal was the original goal was to make sure that we are shorting on a downtrend at the best possible prices whenever price is at a discount so allOf these pullbacks we're trying to short at the peaks and enter into the downtrend and i think that our rules that we have now put together do a great job of getting a great entry price on pullbacks and of course you're not always going to have winning tradesBut what this does is puts the odds in your favor with a good risk to reward ratio so that over a series of many trades you can come out profitable now let's cover take profit target and stop-loss placement and this ties back into our original goal of entering intoTrends at discounts and expecting continuation moves of that trend so our take profit target needs to be placed accordingly based on our goal so right now let's say that you've entered into a short position on this pullback i believe that the profit target should be at least at a minimum to the lowBefore that pullback began because as a trend following trader you expect a full trend continuation move you're expecting a lower high here and then a lower low so your take profit target should be placed accordingly as far as the stop-loss placement goes i do recommend using at least a one toTwo risk to reward ratio and in my opinion it is fine to place the stop loss purely based on where your take profit target is so if this was the setup this would be completely fine to me targeting at least the low before this pullback beganAnd using a one to two risk to reward ratio or better that meets my criteria for a decent setup as long as all the other rules of the strategy are being met okay now i know all of the examples so far have been with a downtrend and turning into short positions butJust in case you were wondering the rules apply the exact same way in an uptrend just the opposite so instead of looking for bearish hidden divergences and bearish regular divergences you'll be looking for bullish hidden divergence and bullish regular divergence and the same thing applies on your stochastic rsi getting fully reset andSo on so exact same rules just haven't happened to be the opposite and an uptrend in case anyone was wondering all right now that's going to cover it for this strategy the way that i believe most people will be able to find consistency in their trading isTrading with the trend with a trend following pullback based strategy and something that gives you a set of rules to follow that make sure you don't make stupid decisions when trading this puts the odds in your favor over a series of many trades with a good riskTo reward ratio so you can be profitable so thank you guys so much for watching i do want to give a shout out to my affiliate capitalize dot a i and by bit bit get and my patreon down in the description below all those links check them out if interested or if youJust want to support the channel thank you very much