Touchbacks Set Up and Rules


#1

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TOUCHBACK SLING,(sometimes noted on charts as a TB) is a very special type of sling with an incredibly low stop loss and nice profit target potential. This setup is a little more advanced and requires close attention to detail on the setup.

SETUP When there is a smooth trend with almost no slings or elevators as the price pushes on through a level of significance and a bar closes on the other side of that level, then the next bar is a sling that retraces and its wick touches back that same level the price just passed through before the bar goes back close in the same direction as the trend it is a part of. The screenshots below illustrate this in 1, 2, 3, etc. order of occurrence.

SHORT/SELL TOUCHBACK SLING:

LONG/BUY TOUCHBACK SLING:

With a Touchback sling setup, it is not necessary to wait for the bar to finish before getting in the trade. Once the price action passes through a level/major street, if it just had a really nice trend with almost no slings or elevator and a bar has opened and closed on the other side of the level, an entry may be placed 1 tick below the level on a sell, or 1 tick above on a buy and wait for the order to be picked up. If the order is not picked up before that bar is closed, remove the order and wait for the next opportunity.

Of note: If the entry is missed by a few ticks, it is okay to move the entry and get in a few ticks late as long as the trade is entered while the sling bar that is the setup. Do not enter a trade on the next bar or later. Leave the stop set 4 ticks higher than the level on a sell and 4 ticks lower on a buy. In other words, if a trade is entered a few ticks away from the significant level, the stop will be more than 5 ticks due to the fact the stop must always be 4 ticks above the significant level no matter where the actual entry was.

SIGNIFICANT LEVELS to touch back to include:
Settlement, (strongest level) Deviation lines, (very strong level) Ice lines, the open, (very strong level) High or low of day, (very strong level) Top of a green Izone,
Bottom of a red Izone,
High or low of yesterday,
50 EMA line
Apex pattern power lines
Any swing levels
Previous highs or lows of that same day.

The stronger the level is, the more perfect the setup must be. For example, settlement, the strongest level of all, needs a perfect setup or chop may be expected instead of pushing through the level and continuing the trend. The .5, -.5 1, -1, 1.5, -1.5, 2 and -2 deviations and high and low of current day and red and green ice lines are all very strong levels also. There is often chop a these levels. The smoother and longer the trend is before pushing through these levels, the more likely it is to continue to trend after that level. If there are several slings or the trend is not very long going into these strong levels, it is more likely to chop after touching the levels. The other levels such as open, top of a green Izone, bottom of a red Izone, high or low of yesterday, 50 EMA line and Apex pattern power lines, any swing levels, previous highs or lows of that same day, can be a bit more forgiving if just one aspect of the setup is less than perfect, i.e., if there was a sling just before it went through the level, it had a big trend before it hit that level, then it is still likely to produce a profitable trade if all other requirements of the setup are there.

CLUES THAT CHOP OR A REVERSAL IS COMING INSTEAD OF A PROFITABLE TOUCHBACK:

  1. There are several slings or elevators in the trend before it hits the significant level.
  2. The established trend is very small before it hits the level of significance.
  3. There is a sling or elevator as it goes through the level.
  4. Two fairly major levels are within 10 ticks of each other, for example Settlement and a red Ice line.

With the small trend and sling as it goes through the settlement level, this would not be a time to take a short Touchback.

HOW TO TELL IF THE TREND IS LONG ENOUGH TO TAKE A TOUCHBACK TRADE:

Add Diagnostic EMA indicator to the chart by right clicking on the chart, go to indicators and add A.P.E.X Diagnostic EMA with the parameter setting changes as shown in this sceenshot. The new templates will have this added in, so this step will not be necessary.

When the bar before your Touchback setup bar clears this EMA line, the trend is long enough to begin looking for Touchback trades. The screenshot explains it further with several examples:

A TOUCHBACK SLING IS A WAY TO GET BACK IN A TREND YOU WERE KICKED OUT OF ON A STOP OR IF YOU MISSED THE FIRST ENTRY OF A LONG TREND. This next chart shows 4 Touchbacks that would have grabbed 30 ticks with each entry for scalps totaling 120 ticks off that huge trend that was a total of about 160 ticks. If the first entry was missed, this illustrates how Touchbacks can be a great way to re-enter a trend.

EXAMPLE OF WHAT THE TOUCHBACK ENTRY ACTUALLY LOOKS LIKE WHEN A BUY (LONG) ENTRY IS EXECUTED ON A LIVE CHART WITH AN ATM STRATEGY SET. The buy order was placed a tick above the swing level, the sell stop was 4 ticks below the swing level, and a sell profit target order was set at 30 ticks. As the price moves in the trade’s favor, pull the stop loss up to break even, and then gradually protect a few ticks so a winning trade does not turn into a losing trade.

… and what it looks like after a trade with the hash marks turned on inside the data series


pinned #2

#3

I think the image for this description might be missing.


#4

Noted, thanks for the catch