Reversing market trade entry checklist

USE THIS TRADE SETUP ONLY IF THE MARKET WAS TRENDING, AND NOW IT DISPLAYED THE HEADWIND POSSIBLE REVERSAL SIGNAL

Headwind setup

Headwind is a trend reversal trade. As a stock makes goes higher and higher (or, lower and lower); eventually, it may display a Headwind signal that indicates a reversal of trend may be imminent. Headwind setup uses this signal as a vital component of the checklist conditions.

If Headwind signal appears when the stock is going straight up or down without discernible swings, i.e., without distinct higher high higher low (or lower high lower low), then the Headwind signal is best avoided.

As Headwind trade is against the prevailing trend, it is possible that the weekly chart Backdrop color would take a few days more to turn in favor trade’s direction. One may enter a trade even without weekly Backdrop color aligned with the trade direction provided the weekly candle shape is firmly in favor of the intended trade direction.

Headwind signal may or may not change the current trend of the stock. It is therefore advisable to take partial profit (or full profit if one so desires) at the Value Area. And leave the remaining position with breakeven or trailing stop. One may also book partial profit as soon as profit equals risk (i.e., initial stop loss) amount.

Trade entry is to be taken only if potential reward (distance between the entry price and initial profit target) is at least as much as the potential risk (gap between the entry price and initial stop loss).

USE THE CUE HOP ON (TRENDING) TEMPLATE FOR THE DAILY CHECKLIST AND THE CUE BACKDROP TEMPLATE FOR THE WEEKLY CHECKLIST​​

Daily Headwind color

Daily Flow candle color

Daily candle shape

Daily Relative Performance

Acceleration color

Daily Reward Risk Ratio

Weekly Backdrop candle

Cyan or green

Cyan or green or yellow

Hollow or with long lower tail

Ascending

Green

At least one or more

Color is cyan or shape is hollow or with long lower tail

Magenta or red

Magenta or red or yellow

Solid or with long upper tail

Descending

Red

At least one or more

Color is magenta or shape is bearish- solid or with long upper tail

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