there are two different ways to trade
you can either scalp or you can
long-term trade
long-term trades have higher stop losses
your take profit level is very far away
so to stay comfortable you need to have
a bigger stop-loss whereas scalping is a
very short-term trade so you want the
most exact surgical entry
very small stop loss and a quick take
profit so in this video i'm going to
show you how to get the best entries
when scalping and how big your stop-loss
should be when you're holding a
long-term position
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welcome back to the channel everybody my
name's artie and this is the moving
average a show where we discuss
everything day trading to keep you
profitable on a consistent basis it's
been a long time since i've discussed
this i've made a previous video about it
but i want to talk about the three line
strike and why it's so important and why
it's actually your best entry for
scalping any market the reason is
because it's price action okay so i've
got us 30 up here on the one hour chart
and what i want to talk about is these
double tops triple tops
strong trends double bottoms i want to
show you how this correlates with trend
trading and getting reversals and
getting the best entries and where your
stop losses should be on longer
positions hopefully you guys can see
this nice strong downtrend right here if
you can't
you need to keep learning you can either
draw a trend line across this in any way
that you want or what you can also do is
just stick up a 21 period moving average
the 21 is a good short term trend and
you can see how many times it's rejected
off of the 21. now zooming in once price
is trading below the 21 almost every
single time that it rejected off of the
21
it was a three-line strike meaning that
there was three green candles and one
engulfing red candle right after three
green one red
three green one red now you may be
asking yourself why i'm scalping on the
one hour chart i'm not i'm just showing
you what these three line strikes look
like rejecting off of a 21 period moving
average the reason why i have it on a
one hour chart is to show you these
definitive double bottoms and double
tops so let me show you these three line
strikes on a five minute chart so these
are the same areas circled from the one
hour chart just zoomed into the five
minute so getting down to the five
minute chart all of these rejected but
this is the only one that had an
engulfing candle where this candle is
completely bigger than this candle
didn't happen here didn't happen here so
once you find that engulfing candle
that's going to be your entry point now
your stop loss is going to be really
really tight it's just going to be above
that swing high now depending on what
your strategy is whether you're
targeting the previous swing low or a
one to two risk to reward ratio or 20
pips
if the trade does not fall within your
parameters if that swing low is not more
than 20 pips you don't take the trade if
you don't get a one to two risk to
reward ratio on that swing low you don't
take the trade but if you can get a one
to two or the swing low is below that
take the trade and just let it play out
this one landed your one to two risk to
reward in 25 minutes again engulfing
candle one to two wrist reward ratio
this one was really really close this
one would have been a one-to-one risk to
reward ratio and you would have been
stopped out anyway so that's why it's
really important to see if your price
target is actually worth you risking the
trade if you're only getting a one to
one it's not really worth risking one
percent if your target is that close
again right here that swing low very
very small and the stop loss is bigger
so don't take that also what you want to
keep in mind
is that as this trend is going on for a
period of time it's eventually going to
reject so you can't just keep taking
every single one of these three-line
strike trades or engulfing candle trades
because you can see you're making lower
lows and lower highs then it makes a
higher high breaking the trend so when
you're scalping you want to be looking
at a higher time frame and the lower
time frame that you're trading looking
for those three line strikes looking for
those good entries and looking for those
tight stop losses but when you're
keeping in mind the higher time frame
like the one hour and looking for these
double bottoms these are going to be
your huge stop loss trades these are
going to be your long term positions and
you want to enter this trade on the
higher time frame so if this was your
swing high the trend went down you
created a double bottom the trend
reversal trade you're looking for a
rejection off of that double bottom
and your stop loss is going to be
a nice comfortable distance below this
double bottom just in case it makes a
triple and your price target is going to
be where the price crossed a lot on this
swing high or if you've drawn up support
and resistance lines the previous known
support and resistance this trade took
seven days but it did get you 113 points
so basically what i'm trying to tell you
is that if you're scalping you're
scalping with the trend and you're using
these price action indicators like a
three line strike to let you know that
that's going to be your entry price
that's going to be your sniper entry
where you get the shortest stop loss and
you just jab that thing every single
time as the price is continuing in that
trend a trend is all about lower highs
and lower lows or vice versa then once
you make the same low on a double bottom
you know the trend is weakening and you
should be looking for the price to go
the other way short term scalping with
the trend longer term higher stop loss
trades against the trend or if you're
like me and you don't like to do long
long-term trades you just wait for a
nice strong trend to form again and then
you scalp that trend along the way i
hope this video helped you if you want
more information on the three-line
strike watch this video right here if
you want more information on these
double bottoms and double tops check out
this video right here if you guys got
some value out of this video you learned
something new or it gave you that aha
make sure you're dropping a like on
these videos and we will see you in the
next one