What is JJRVAT’s Price Action Trading Strategy?
The JJRVAT’s Price Action Trading Strategy is a technique of trading that uses indicators to trade price action.
It was first introduced by Jjrvat and thus takes the name of its developer.
It is a simple trading strategy that blends indicators with price action to improve trading results.
The JJRVAT’s Price Action Trading Strategy involves the use of two moving averages as the indicators.
First, a slow-moving or long-period moving average to track the market’s general trend.
The second is a fast-moving or short-period moving average to track the market’s short-term price moves.
But how slow-moving or fast-moving should this set of moving averages be?
Furthermore, which moving average types are the most favorable for each of the two, for the most accurate results?
Well, for the slow-moving moving average, a 240-period Weighted Moving Average (WMA 240) was proposed by Jjrvat.
The fast-moving moving average is a 21-period Hull Moving Average (HMA 21) or even a 21-period Exponential Moving Average (EMA 21).
I know you are wondering how you can use these two indicators to trade price action.
Well, in this post, I will demystify everything about how to use JJRVAT’s Price Action Trading Strategy to help you win more in Olymp Trade in the New Year, 2021.
Using JJRVAT’s Price Action Trading Strategy to Win More in Olymp Trade.
Apply the Indicators.
To this end, we know the JJRVAT’s price action trading strategy as one which incorporates both indicators and price action in deriving trading signals.
From our introduction, we mentioned that the indicators in question are simply two moving averages.
Click on the indicators tab of your chart and apply the Weighted Moving Average (WMA), adjusting its period to 240.
Click on the same tab and apply the Hull Moving Average (HMA) or the Exponential Moving Average, adjusting either of them to period 21.
Note here that for the second moving average, you apply HMA and if not available, use EMA, but not both.
Then those are the only indicators required for the JJRVAT’s Price Action Trading Strategy.
You can now proceed to the next step.
Establish the General Market Trend.
The purpose of a slow-moving moving average, as we mentioned, is to track the market’s general trend.
The reason we must establish the market’s general trend is that we want to place all trades only in the direction of the long-term market trend.
Doing so gives the trader a high probability of winning the trades, and Jjrvat knew this.
So what do you use to establish the market’s general trend?
You use the slow-moving MA, which is the 240-period WMA.
If it is sloping or pointing upwards from left to right, then the general trend is upwards.
If, however, WMA 240 is sloping or pointing downwards from left to right, then the general trend is downwards.
Ignore situations where WMA 240 is horizontal or not showing any directional bias.
The market is neither moving upwards nor downwards with significance and so you have no definite direction to place trades towards.
Establish Short-term price movements.
The purpose of a fast-moving moving average, as highlighted in our introduction, is to track the market’s short-term price moves.
It is such short-term price moves which we will utilize to pick signals and profit from.
After establishing the general market trend, you want to see if the short-term price moves concur with the general trend to trade.
Remember the only relevant small price movements are ones that reinforce price movement in the direction of the general trend.
Meaning, if the general market trend as established by WMA 240 was upwards, then you expect HMA 21 or EMA 21 to give you bullish signals to trade up.
However, if WMA 240 established a downward general market trend, then HMA 21 or EMA 21 should give you bearish signals.
On an upward general trend, HMA 21 or EMA 21 must highlight higher swing highs and higher swing lows if you will consider the bullish signal.
On the other hand, on a downward general trend, HMA 21 or EMA 21 must show lower swing highs and lower swing lows for you to consider the bearish signal.
If such conditions are not met, then it’s not yet time to consider the signal.
Note: On establishing short-term price movements, remember we are not observing price swing highs and swing lows.
We are observing the moving average (HMA or EMA 21), and looking at its swing highs and swing lows. Get that clear and proceed.
Confirm the Signal.
If all conditions are met up to where the HMA 21 or EMA 21 gives valid bullish or bearish signals, then you can proceed with this step.
Here is where the indicators meet a perfect blend with price action and help confirm that the signal is valid and worth trading.
Here is how to confirm a Signal for an Up Trade:
- Upwards General Trend (WMA 240 sloping upwards).
- Upwards Short-term Price movements (HMA or EMA 21 forming higher highs and higher lows).
- HMA or EMA downward Pullback (HMA or EMA 21 pulls back downwards towards forming a swing low).
- HMA or EMA 21 pullback does not go below the previous HMA 21 or EMA 21 swing low.
- Price Closing Above HMA 21 or EMA 21.
Confirmations for a Down Trade Signal are as follows:
- Downwards General Trend (WMA 240 sloping downwards).
- Downwards Short-term Price movements (HMA or EMA 21 forming lower highs and lower lows).
- HMA or EMA upward Pullback (HMA or EMA 21 pulls back upwards towards forming a swing high).
- HMA or EMA 21 pullback does not go above the previous HMA 21 or EMA 21 swing high.
- Price Closing Below HMA 21 or EMA 21.
Enter Buy or Sell Positions.
Did your Up trade signal pass all the 5 confirmations? Then enter a Buy position. On the flip side, if your Down trade signal passed all the 5 confirmations, then enter a Sell position.
Adjust Stop Loss and Take Profit.
Apply your Stop Loss for Buy trade just below the signal candlestick and for Sell trade just above the signal candlestick.
The signal candlestick, in this case, is the candlestick that completes the action of the price closing above or below HMA 21 or EMA 21 accordingly.
Your Take Profit should target at least twice what your Stop Loss risks.
That becomes a risk to reward ratio of at least 1:2. ‘At least’ means that you can always target more depending on how your ‘trader discretion’ informs your decision making for that trade.
Wrapping Up on How to Use JJRVAT’s Price Action Trading Strategy to Win More in Olymp Trade in 2021.
Did you see the point at which the strategy blended indicators and price action?
The fact that the market had to be showing a directional bias and that the price had to move beyond certain levels is a perfect picture of how indicators were mixed with price action.
Indeed, the JJRVAT’s Price Action Trading Strategy makes use of indicators to trade price action.
Wanna win more in Olymp Tarde in 2021?
Try this strategy. To ensure it works, first test it on a demo account.