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The Strat Indicator
#TheSTRAT is a trading method pioneered by Rob Smith, known as @RobInTheBlack on Twitter, who developed this approach over his 20-year participation in the market. Operating a trading room at Ticker Tocker, he believes in eliminating market noise by focusing on elements that can be defined, quantified, analyzed, and executed on. TheSTRAT involves analyzing multiple timeframes through three key elements: Major direction, candle analysis, and the conclusion of price direction.
Description
Every trader probably have their preferred way of looking at price data. Some like typical Japanese candles, while others prefer something more filtered The major principles of TheSTRAT encompass Time Frame Continuity, Broadening Formations, and Inside Bars. Time Frame Continuity is assessed by evaluating a stock across four major timeframes, identifying who controls the market, whether buyers or sellers.
How can the indicator be used?
Read price action
Spot divergences
Spot support/resistance levels
Read momentum
Volume analysis
Input to your automatic system
Juan Jacobs
Developer
(FX Automate)
With a BSc in Business Information Technology, Juan traded a 7-year career as a Systems Analyst for full-time trading. Through logic and methodology, Juan's created numerous successful trading systems and indicators. His contributions to ProRealTime are a testament to his expertise, making him a respected figure in the community.
Release date
August 2021
Market
Which ever
Full description
Trading with TheSTRAT: A Ripple Effect in Action
Broadening Formation refers to the pattern where securities trade in a series of higher highs and lower lows, reflecting the dynamics of supply and demand. Inside Bars signify equilibrium in trading and provide clues on when to initiate a position. These principles are not ranked by importance but function together to determine low risk/high reward trade setups.
The psychology of TheSTRAT is based on a ripple effect analogy, showing how trends initiate and follow like waves, impacting larger time frames as they progress. To trade using TheSTRAT, a trader must define their time frame, examine bar characteristics, and consider various factors like entry, exit, and variations of trading methods. The approach also includes aspects such as market scanning and multiple time frame charts based on TheSTRAT, trade planning, and considering the trend and characteristics of the immediate time frame when planning an exit from a position. This method allows for flexibility and adaptation to the evolving nature of market behavior, offering various tools and strategies to suit different trading styles.
How to interpret signals?
This indicator uses candlestick analysis to identify when a reversal has taken place. In theory there are only 4 ways in which price can reverse. I will explain the bearish reversals as the bullish reversals are simply the opposite of the below.
2-2 reversal: candle with a higher high and higher low than the previous candle is then succeeded by a candle with a lower high and a lower low
2-3 reversal: candle with a higher high and higher low than the previous candle is then succeeded by a candle with a higher high and lower low (outside bar)
2-1-2 reversal: reversal: candle with a higher high and higher low than the previous candle is then succeeded by a candle with a lower high and higher low (inside bar) succeeded by a candle with a lower high and lower low
3-1-2 reversal: candle with a higher high and lower low than the previous candle (outside bar) is then succeeded by a candle with a lower high and higher low (inside bar) succeeded by a candle with a lower high and lower low
For safe price action trading only entries based on a strat reversal signal should be considered