Trading System Based on Monthly, Weekly, (Trading System Based on Monthly, Weekly,)

Introduction:
Hello fellow traders! I have been exploring a trading system that revolves around key price levels such as monthly, weekly and daily open prices. This system is particularly interesting because it combines the simplicity of price action with the reliability of key levels. I'd like to share my findings and hear your thoughts, experiences, and suggestions on how to optimize this approach.
Key concepts of the system:

1. Monthly opening price (MOP):
   1. The opening price on the first trading day of the month.
   2. Serves as the main support/resistance level throughout the month.
   3. Prices above the Macau Pataca indicate a bullish trend; below they indicate a bearish trend.

2. Weekly Opening Price (WOP):
   1. The opening price on the first trading day of the week.
   2. Used to measure short-term momentum.
   3. Prices above WOP indicate bullish sentiment; the chart below shows bearish sentiment.

3. Daily opening price (DOP):
   1. The opening price of the current trading day.
   2. Useful for day trading strategies.
   3. Prices above the DOP indicate intraday strength; prices below signal weakness.

4. Key extreme cases:
   1. Monthly, weekly and daily highs/lows.
   2. Used to identify potential breakout or reversal areas.

How the system works:

1. Trend identification:
   1. If the price is above MOP, WOP and DOP, the trend is strongly bullish.
   2. If the price is below MOP, WOP and DOP, the trend is strongly bearish.
   3. Mixed signals (such as above the MOP but below the DOP) indicate consolidation or a potential reversal.

2. Entry point:
   1. Buy: Look for price rebounds from MOP, WOP or DOP and confirmation (e.g. bullish candlestick pattern, RSI above 50).
   2. Sell: Look for price rejection and confirmation of MOP, WOP or DOP (e.g. bearish candlestick pattern, RSI below 50).

3. Stop loss and take profit:
   1. Place a stop-loss order below support (buy) or above resistance (sell).
   2. Take profit targets can be set at the next key level (e.g. weekly high for buys, weekly lows for sells).

Example scenario:

1. Current price: 2723.56
2. Macau Pataca: 2521.70 (price above – bullish)
3. WOP: 2637.02 (price above – bullish)
4. DOP: 2747.82 (price below – intraday weakness)
5. Previous day’s high/low: 2791.46 / 2662.00
6. Action: Wait for price to break above DOP (2747.82) for a buy signal, or below WOP (2637.02) for a sell signal.

Optimize the system:

1. False breakthrough:
   1. Price usually breaks through a certain level (such as DOP) before reversing. Use confirmations (e.g. candlestick patterns, RSI) to filter out false signals.

2. Liquidity area:
   1. Identify areas where stop-loss orders are likely to cluster (e.g., below WOP or above DOP). Price usually moves into these areas before reversing.

3. Combined indicators:
   1. Use RSI, moving averages or volume to confirm signals.
   2. For example, a bounce off WOP with RSI > 50 is a stronger buy signal.

4. Risk management:
   1. Risk no more than 1-2% of your account per trade.
   2. Aim for a risk-reward ratio of at least 1:2.

Discussion points:

1. Have you used a similar system? Share your experiences and results.
2. How do you deal with false breakouts? What filters or confirmations do you use?
3. What metrics are best suited for this system? RSI, moving averages or other indicators?
4. How do you set stop loss and take profit levels? Do you use fixed levels or dynamic levels based on volatility?
5. Any suggestions for improving this system? Let’s brainstorm ideas together!

in conclusion:
This trading system is simple yet powerful as it relies on key price levels that are widely followed by institutional and retail traders. By combining these levels with appropriate risk management and confirmation tools, a robust trading strategy can be built. I'd love to hear your feedback and learn from your experiences. Let’s discuss and improve this system together!