The Advanced Strategy: Expanding on the Ivanovitch Momentum System (IMS)
In this article, we’ll explore the Advanced Strategy using the Ivanovitch Momentum System (IMS). Building on the Simple Strategy covered previously, this approach adds multiple trades based on market movements. While the basic principles of signals and stop-losses remain the same, this version introduces a more dynamic trade management system to optimize gains and minimize losses.
Understanding the Advanced Strategy
The Advanced Strategy follows the same core idea as the Simple Strategy: taking trades based on strong long and strong short signals generated by the IMS indicator. However, the advanced approach introduces multiple trades at various points in the trend to maximize potential profits.
Key Features of the IMS Indicator
Like the Simple Strategy, the IMS indicator provides:
• Support and resistance lines to help identify price boundaries.
• Patterns that reflect market behaviors.
• Signals, with a focus on strangle signals.
What sets this strategy apart is the use of multiple entries during the trend, rather than a single trade. This helps to capture more pips and boost overall profit potential, especially in strongly trending markets.
Entry Conditions
In the Advanced Strategy, trades are based on the same strong long and strong short signals as before:
1. Strong Long Signal: When a strong long signal appears, enter a buy position on the next candle.
2. Strong Short Signal: When a strong short signal appears, enter a sell position on the next candle.
The difference now is that with every new strong signal, another trade is opened, but with a smaller lot size.
Example of Multiple Trades:
- Start with a lot size of 0.02 for the first trade.
- For each new signal (e.g., another strong short), open an additional trade with a smaller lot size, such as 0.01.
This accumulation of trades allows for exponential growth in profits if the trend continues.
Stop-Loss (SL) Setup
The stop-loss setup remains consistent with the Simple Strategy:
• For long positions, place the stop-loss below the nearest support line.
• For short positions, place the stop-loss above the nearest resistance line.
Each trade should have its own independent stop-loss, allowing for controlled risk on multiple trades at once.
Take-Profit (TP) Setup
There are two main options for setting your take-profit:
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Risk-Reward Ratio: Aiming for a 1:1 risk-reward ratio is a solid and simple approach. For example, if your stop-loss is 50 pips, set your take-profit to 50 pips as well. This ensures a balanced strategy.
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Trend Reversal Exit: Another option is to wait for the next trend reversal signal (e.g., a strong short signal after being in a long trade). This approach may result in larger profits but requires close attention to the market.
Exit Conditions
The exit conditions in the Advanced Strategy are more flexible:
• Risk-Reward Exits: Close trades once the 1:1 risk-reward ratio is hit.
• Multiple Trade Exit: Close all open trades when a strong opposite signal is identified.
• Manual Exit: In cases of unclear market movement, manually close trades based on market behavior.
The key here is that all trades are closed at the same time when a reversal is identified.
Symbols and Timeframes
Like the Simple Strategy, the Advanced Strategy works across multiple symbols and timeframes, though it’s best suited for trending markets.
Suggested symbols:
- XAU/USD
- Major forex pairs
- Indices with strong trends
Suggested timeframes:
1-minute to 30-minute charts work best, as they offer clearer signals in shorter timeframes.
Trade Example: A Step-by-Step Guide
1. Identify the Signal: You spot a strong short signal on XAU/USD on a 1-minute chart.
2. Enter the Trade: Open a sell position with a lot size of 0.02 on the next candle.
3. Set Your Stop-Loss: Place the stop-loss above the nearest resistance.
4. Monitor for Additional Signals: You get another strong short signal—open a second short position, but with a smaller lot size (e.g., 0.01).
5. Continue Adding Trades: Continue this process, adding smaller trades until you spot a trend reversal (e.g., a strong long signal).
6. Exit All Trades: Once the trend shows signs of reversing, close all open positions simultaneously, locking in profits from each trade.
Key Tips for Success
- Stay Disciplined: The Advanced Strategy requires careful monitoring. Only enter trades when valid signals are present.
- Don’t Overtrade: Stick to the plan—only add trades when new signals confirm the trend.
- Set Realistic Targets: While accumulating positions can increase profits, be mindful of your risk management.
Summary Table
| Aspect | Details |
|---|---|
| Entry Signal | Strong long or strong short signal (buy/sell on the next candle) |
| Stop-Loss Setup | Place below support (long) or above resistance (short) |
| Take-Profit Setup | 1:1 risk-reward ratio or exit on trend reversal |
| Multiple Entries | Open new trades with smaller lot sizes after each new signal |
| Exit Conditions | Close all trades on opposite trend signal or hit risk-reward ratio |
| Recommended Symbols | XAU/USD, major forex pairs, trending indices |
| Recommended Timeframes | 1-minute to 30-minute charts |
| Strategy Strength | Great for capturing more pips in strong trends while minimizing risks |