The Level 1 & 2 Strategy
Published by Trading College in Strategy · Wednesday 03 May 2023
We have been seeing some incredible moves across the markets over the past few weeks.
In particular, recent volatility across the commodities has led to our systems at Trading College highlighting some brilliant trades across these markets, and this trade was no exception!
There was a cracking Short trade on US Crude Oil which gave us over 300 points profit. With a Stop Loss of just 70 points, this trade would have made over £600 taken at £2 per point in a Spread Betting account.
Did you spot this trade? If you did – congratulations!
If you didn’t – don’t worry! There’ll always be plenty more profitable trades to come along in the futre. The markets really are a never-ending buffet of opportunity – if you know how to read them.
So, how did we know about this trade?
Let’s take a moment to learn about the Level 1 & 2 Strategy. If you can recognise this setup (and know how to implement it correctly) then you’ll begin to spot these profitable opportunities on the markets.
What is the Level 1 & 2 Strategy?
The Level 1 & 2 Strategy is one of our core trading strategies here at Trading College. The strategy is signalled by a combination of indicators – for this trade we used the Pro-MACD and Pro-OBS for the setup and the Pro-Trading System and Storyteller to check our bias.
For a Level 1 Short the Pro-OBS must be high in combination with the Pro-MACD lines Red over Green.
The Bias
Take a look at the this first chart:
This is the Weekly Chart of US Crude Oil. You can see clearly from the Red Pro-Trading System candlesticks and the Red Storyteller that we have been in a downtrend in this market for the past few weeks.
Therefore we’re looking for any opportunities to trade this market to the Short side on the lower timeframes. And so when the markets gave us a signal to get Short with the Level 1 Strategy this was an opportunity not to be missed!
The Set-Up
Take a look at the second chart:
This is the Daily Chart of US Crude Oil. We had Green over Red on the Pro-MACD, a high Pro-OBS signal and a Red Storyteller confirming our bias. This is all we need for a valid trade set-up.
You may notice that although we don’t have Red Pro-Trading System candlesticks we did have Pro-Trading System targets on the charts further adding confluence to our bias.
The target for Level 1s & 2s is always the n- or u-shaped target of the setup timeframe.
This trade made over 300 points profit. But how would you have entered?
The Entry
Take a look at the next chart:
This strategy has simple, clear rules for entering trades. You could have entered in one of two ways:
Either…
A break below the previous candle low which, with a stop at the previous swing high. This would have given you 1:5 Risk:Reward and over 360 points profit.
Or…
A confirmed break of the 1hr Trend Line drawn up the previous lows. With a stop at the previous swing high this could have
given you just shy of 1:2 Risk:Reward or 290 points profit.
The Level 1 & 2 Strategy is a brilliant tool to have at your disposal as a trader at Trading College. The setup, entry criteria, stop placement and profit target are clear and the same for every trade. Take a note of this trading strategy and add it to your arsenal.
If you have any questions or are interested to find out more about what we do here at Trading College please don’t hesitate to get in touch.
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In our Learn to Trade On-Demand webinar, Trading College’s founder Lee Sandford takes you through the basics of learning to trade and the trading strategies that we use at Trading College. Click here to join.
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