Location: Phoenix, Arizona
Here are the trading rules if anyone wants to code it:
1. Identify a new high in existing strong trend with ADX(14) > 30 & rising
2. Identify retracement toward 20 EMA - may be accompanied by turndown in ADX value
3. When price touches 20 EMA, place buy stop above high of previous bar
4. Place protective sell stop below low of recent swing low (below 20 EMA)
5. Close position at or near most recent swing high. (If trend is strong in a higher timeframe, exit 1/2 position and let other half ride. Tighten stop.
6. If stopped out after entry, re-enter trade with a new buy stop at the original entry price.
Reverse rules for short trade.
This is one of my favorite day trading set ups. I trade it almost daily but have to do it manually. I use a 22 EMA but enter trade a few ticks before price reaches the 22 EMA. I am not recommending a change in trading rules, it's just that I use the 22 EMA for other setups including support & resistance and don't want to clutter up my charts more than necessary. The grail trade can be used in any time frame.