The 10 Bar Rule – is yet another potential Trade Plan that we would like to share with you. For the set up you use a 10 time period bar chart. The Trade Plan is as follows:

Trigger – has the following set up conditions:

1. Look for 10 bars (or more) that trade between a high low point established by these 10 bars. Typically a wedge. Establish the high, low and center of this congestion area.

2. The price action should trade back through the center point at least once as it establishes the 10 bar range congestion area.

3. The trigger is when the price range high or low is breached establish a break out of this congestion area and the trade is traded in the direction of the break.

Filter: A filter of not trading during times of a big news event.

Order management: Set stop at the center point between the trigger’s high and low. The profit target is the same distance from the outer range (the high or low depending on the direction of the trade) trigger point to the center of the trigger range as is the distance from the trigger point to the potential profit target point. This means you have a 1 to 1 profit/stop ratio (2 to 1 profit stop ratios could be considered). This projected win loss ratio is around 60 to 75%.

The idea of this trade is that the price action has been consolidating in an area and the market then pushes the price in a break out trade to another price range area. Variations to this would be trying this on other time frames (adjusting the 10 bars to something else perhaps) and perhaps an entry point of current trigger point less (or plus depending on the direction of trade) “x” pips to have a slightly better entry (with of course the risk of failure to get the entry). Take a look at the thumbnail for an example of this strategy. So look for this trigger and let us know if it works for you.