My New Favorite Trading Setup on 5m Chart! It Will Blow Your Mind!

on trading view platform here set the time frame on five minutes and then here click on indicators and first search andy on oscillator this one which is an editor specs indicator and written by alex grover and then search adx this one average directional index which is a built-in indicator on trading view platform we're gonna use these two indicators with default settings and we just need to add a horizontal line here on adx at 10 when the line is selected here you can click on settings and here on coordinates tab you can set it at 10 if it is not set at 10 before i start explaining how you can find accurate buy sell signals based on this setup if you like my contents please support the channel by liking the video and subscribing to my channel all right this is a scalping strategy and it is suitable for time frames like five minutes and one minute right now we are on five minutes time frame this chart is euro to us dollar in forex market but no limitation on this and you can use this trading strategy in any market or asset but we only need one requirement and that is high trading volume and liquidity why because this is a scalping strategy and in terms of price movement the profit and loss that we're gonna take are very small so any unreal price gap or large spread between bid and ask prices can damage our trade entry stop loss and profit target so in forex market major pairs are recommended in crypto market for example btc usct and in stock market companies that have large trading volume and liquidity like apple tesla microsoft and others all right now let me teach you the trading strategy but before that i'm proud to announce that i have published a book the art of price action trading which is a complete guide to price action analysis the link is in the description and you can get it later if you want to master price action trading all right getting back to the chart with this trading strategy we try to identify when the price is in a very tight consolidation period and then we try to catch the break out of the consolidation period for this purpose we added two indicators here adx and andy on oscillator if you know andy on oscillator this is an indicator that can help you with trending and non-trending phase of the market we have three lines here red green and orange when the orange line is above the other two it shows flat market and when red line is above the other two it shows increase of downside momentum and when the green line is above the other two lines it shows increase of upside momentum and with adx as you know this is also a famous indicator for identifying trending and non-trending market but this is a non-directional indicator which means that it will not tell us anything about direction it only tells us if the price is trending or not trending when adx line is below 20 the market is not trending and when adx line is above 20 it tells us that the market is trending in one direction but in this trading strategy our benchmark is at 10 we are interested in times that adx line goes below 10 this tells us that the price has been moving in a tight consolidation period until now and there is a high potential for breakout in the second step we check andy on oscillator in andy on oscillator the orange line should be above the other two lines this will also confirm that the price is flat and there is no considerably higher upside momentum or downside momentum in the market so at same time we want to have adx line below 10 and here in andy on oscillator the orange line above the other two lines until now we know that the price is moving flat in a tight consolidation period in the next step we wait for a breakout as i said andy on oscillator can help us to know if the momentum is increasing in a direction for example here in this case you can see that the line crossed above the orange line this shows that we have considerably increased downside momentum in the market so probably the price is out of the flat market even when we check the price action we can see that the price is closed below the consolidation period so we can say that here we have a downside breakout and in practice we could enter a short position at this point with surplus above the consolidation period and profit target at 1.5 risk to reward ratio all right now let me show more examples so you better understand please pay attention that this is a low frequency trading strategy which means that you don't get the setup frequently and you need to wait for the special moment when adx line goes below 10 this condition doesn't always happen but when we have it shows a very tight consolidation period in the market and so high probability for breakouts here you can see that adx line went below 10 and at the same time here in andy on oscillator the orange line is above the other two lines and even when we check the price action we can clearly see that the price is in a very tight consolidation period now we should wait for a breakout and as i said andy on oscillator can help us with this you can see that here the green line crossed above the orange line and this gives the probability that an upside breakout is happening in the market so in practice we could enter a long position at this point with the surplus below the consolidation period and profit target at 1.5 risk to reward ratio all right let's find another trading opportunity so you completely understand how you should trade based on this trading strategy here you can see that adx line as you can see went below 10 and before i continue with this setup i must mention an important point about trading if you want to improve in trading you need a trading journal you need to track your performance so you can build discipline and avoid repeating the same mistakes i have created a trading journal it is available on amazon now the link is in the description and you can get it later and start journaling your trades all right getting back to the chart so here we have adx line below 10 and at the same time here in andy on oscillator you can see that the orange line is above the other two lines this situation tells us that we have in a tight consolidation period and there is a high probability to have a breakout here at this point you can see that in andy on oscillator the red line crossed above the orange line and this tells us that we have considerably greater downside momentum in the market now so in practice we could enter a short position at this point with this surplus above the consolidation period and profit target at 1.5 risk to reward ratio let's move on the chart to find another trading opportunity no crossing of adx line below 10 until now and here at this point you can see that adx line went below 10 and at the same time here in andy on oscillator you can see that the orange line is above the other two lines and after this situation here you can see that the red line crossed above the orange line suggesting that probably we have a downside breakout so we could enter a short position at this point with this surplus above the consolidation period and profit target at 1.5 risk to reward ratio please pay attention that although this trading strategy is highly accurate but this doesn't mean you will not have false signals no there is no trading strategy with 100% win rate this is not possible in reality and you need to manage your risk properly there is a risk management strategy that is called one percent role and it is one of the best risk management strategies that you can use i have a complete guide on this the link is also placed in the description and i highly recommend you to watch it now because without a proper risk management you cannot survive in this game all right that's it thank you for watching this video if you have any questions feel free to ask and leave a comment for me i'll answer your questions as soon as possible if you haven't subscribed to my channel please subscribe and hit the bell so you get the notifications of my new videos see you guys in next video and good luck with your trading