Lesson 11 – Why We Prefer the Setup 1?

What is the best forex setup? Is there such a thing like perfect setup? In this lesson we will explore this possibility

Objectives of this lesson: 
  • The purpose of the video is to put emphasis on WHY WE WANT TO TRADE SETUP 1’s only. There is a fundamental and most logical reason behind it.
  • What is a perfect setup and how to identify one? 

Setup 1 is the best setup because, through the past 10+ years of data, we have found that the HIGHEST probability SETUPS are Setup 1’s...That is the whole point. 

The Setup 1 is a Breakout method but it is a trend following breakout. Which means that you take breakout entries within and in the direction of an established trend. So, it is NOT a breakout of a trading range. Breakouts of trading ranges are not profitable at all. 

The Setup 2 is also very profitable and not very different to setup 1. The only difference is that it is the 2nd Box level after the Setup 1. that’s all. 

The Setup 0 gives you a 40% success rate which means you’ll have to have a 3:1 average win to loss ratio. It’s possible to hit 1:5 winners of Setup 0’s. Setup 0’s are mostly breakout trades. Setup 1’s are Breakouts in the direction of the trend. The Setup 0’s require further enhancement. You need to have a solid add on strategy so that you scale into your positions. 

Setup 0, a breakout setup, is tough entry method but very profitable. However this could be a big BUT for most beginners forex traders. Beginners like to have quick winners and love high win rate methods. The novice forex trader cannot cope with low win rate methods. Despite the fact, the insanely profitable methods are all under 40% win rate. Not an easy cup of tea for the beginner. But don’t worry though, we got you covered. Read on

The problem of new traders is that they don’t usually have the PROBABILISTIC MINDSET, which is an essential / requirement for trading success. We do have a solution for this thanks to Mark Douglas (rip). Read More about T20 Principle Link here

Why is this the Perfect Setup 1? 

The Perfect Setup One is a Picture or a Pattern on the chart that has the following 4 Characteristics 

  1. It has the three Rules of the Setup 1 all ticked. 
  2. It has created a perfect sequence of wave 1 through to wave 5 and according to the 10 seconds Elliott wave concept 
  3. It is aesthetically pleasing and 
  4. It has produced a 1:2 (risk to reward ratio) profitable trade. 
  5. It hits Target Zone. 

 

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