The 10-1 strategy is a powerful trend following strategy for day and swing traders and can also be used as a rule or condition to confirm other trading strategies.
As with many outstanding trading strategies pattern recognition skill are the key to success. Remember that mechanical entries, stops and targets eliminate much of the emotion from the trade.
Super Scalper. We use the code 10-1 in our training sessions
All trending markets with a good trading range.
Momentum trend following and counter trend/trend reversal.
As this is a trend following strategy reliant on momentum, false signal can be generated in choppy or range bound markets therefore this strategy is best suited to markets with a good trading range. Look for a trending market for trend following trades.
Indicators and settings
10 EMA.20 EMA. Many traders like to use an indicator such as the 50 CCI to help confirm the trend. The 50 CCI functions extremely well in confirming a trend direction. When the 50 CCI is above the 0 line consider long trades only. When the CCI is below the 0 line consider short trades only.
For a long trade. once the 10 cross above the 20, look for a pullback (3 or more bearish candles) then I am looking for 2 bullish candles each to close higher in the direction of the trend and when the next candle ticks above the high of the second candle we have an entry signal. This may not necessarily be the next candle (third candle) When trend trading, trade only in the direction of a trending 20 EMA. The 10 EMA is also to be above the trending 20 EMA The CCI 50 to confirm the trend direction. Above 0 line for long trades, below 0 line for shorts. Wait for the candle or bar to close in the direction of the trade.
As a minimum your profit target should be a minimum of 1 to 1 with that being said the earlier you enter a10-1 in a new trend the great the profit potential. I recommend that you exercise caution when taking more than 3 10-1 signals in a trend. Another exit strategy with the 10-1 is to exit the trade on an opposite 10-1 entry signal forming. If trading with the trend on a counter trend 10-1 signal, exit the trade.
Place your protective stop 1 to 2 ticks below the closest swing low for long trades or above the closest swing high for short trades. As each market and time frame may have its own nuance’s I recommend you view the last 50 setups/trades to ensure the stop recommended is best suited to the market-time frame you wish to trade.
The further your trade entry is away from the 20 EMA or if price action is strongly trending away from the20 EMA. Be extremely cautious as a pullback-retracement may be imminent. Also if you are reaching a level of resistance or support in a trade either exit your trade or tighten your stop.
Total open positions should never exceed 2% risk of your trading account.