I am dialing in my entry on one of my favorite strategies: The Stackable Carry Trade
If you have not downloaded the free guide on trading this strategy, you can grab it here.
I thought this would be an excellent article for two reasons:
- For those that already have the report and are attempting to use it, this is a perfect step by step guide on how to do it with a live trade on the horizon
- If you have not read the report, this gives me an opportunity to show you how this strategy works and then you can grab the no-cost report for even more detail if you’d like to trade this strategy on your own.
So the first step to being able to use the SCT (stackable carry trade) Strategy is finding a pair that earns you a positive swap (meaning that it pays you interest as you hold it–there’s a list of these in the free report).
Not only should it pay you interest but it should have a strong, structural trend in place.
Today, I am honing in on the AUD/CHF:
Above, you can see a nice consistent upward motion on the daily chart with powerful bullish swings.
According to my trend-line, we are at a great price where we could see another strong bullish swing to the upside.
This sets up perfectly for the SCT Strategy because it is a long, rangy pair with swings in both directions…
And just looking at the chart, it is obvious that IF we get a continuation to the upside, it will likely take weeks and possibly even a few months to get to our target, so why not get paid EVERY day to hold that trade?
Most traders don’t have the patience for this type of trade… But for those that do, it can be a handsome payday!
Following the report, you can sere that the above chart has already accomplished step 1 and 2: A nice trend and we’ve already found ourselves a great pullback:
We know the market has tons of room to the upside, so we can move on to step 3.
Step 3 is where we locate our “Point of no return”
As you’ll learn in the report, this is a critical area of Support or Resistance where we believe the market is VERY likely to stay above in the near future. Holding price above this key area is one of the things that almost guarantees we can hold the trade for a while and earn significant interest whether we win or lose the trade.
Going to the weekly chart, I can find the most critical S/R areas and determine where my stop loss should be:
Here, you can see I have highlighted some key areas that have stopped the weekly momentum in the past. I know that these area (where an “X” is plotted) are likely to stall price out and keep my trade alive which is the main goal in the SCT strategy.
I have planted a flag at the point of no return. If price gets there, my flag will go from red to white as I retreat and exit the trade (sorry I couldn’t help myself from using that metaphor once I found that nifty flag icon :P)
Now that I have planned the structure of the trade, the final thing to do is set up my initial entry and pending orders (not to beat a dead horse, but the pending orders make more sense once you read the report).
For my entry, I am just going to use a 60 Minute trend line (the entry price–although always important–is less critical in this particular strategy than it would be in most others).
As soon as price makes a break here, I will be in with my first entry.
After my first entry is set, I can go ahead and plan my next entries. “Stacking” on to the trade does several things:
- Gives me more size on the trade which equals more interest
- Allows me to exit partial positions with profit if price moves down, picks up an order and bounces back up to initial entry
- Greatly maximizes the total profit of my position if price goes to my target
**NOTE: The report shows you how to calculate risk for growing an account. I will be using an income model for this trade and simply using a lot-based approach. If you have less than 50K in your account, I recommend a risk-based approach rather than income.
To plot my next entries, I simply go back to my initial daily chart and find key support areas where price is likely to bounce.
Here’s the outline for each of my entries:
The dotted lines represent my future BUY pending orders. You can see by the boxes that each entry at a lower price really maximizes the risk/reward ratio of the position. And, as a bonus, it adds more lots to the trade so that as it floats around for weeks and maybe even months, I am raking in a solid interest payment the whole time.
To me, this is a perfect trade–win or lose–because it follows all of my rules, has clear guidelines and even takes advantage of the market by getting interest as I hold the trade.
I hope you liked this step by step guide to my current trade… And remember, the full report is free here.