Comparing the Modified 10-Step Trading Strategy vs. Retracement Trading Strategy

Contents:

• Modified 10-Step Trading Strategy Scenario

• Retracement Trading Strategy

• Key Differences Between the Two Approaches

• Conclusion: Which Strategy Is More Effective?

As we refine our live trading approach under the Budget Ethical Trading Account (BETA), we are evaluating two distinct methods: the Modified 10-Step Trading Strategy and the Retracement Trading Strategy. Each approach offers unique insights into market behavior, risk management, and execution style. This post compares both models, highlighting their strengths, weaknesses, and potential applications.

Modified 10-Step Trading Strategy: Key Support, Resistance, and Risk Management in Action

Retracement Trading Strategy: Using Key Levels to Identify Trend Continuation & Reversal

---

1️⃣ Modified 10-Step Trading Strategy Scenario

🔹 Primary Focus: Tactical trading based on key support and resistance levels with strict stop-loss placement.

🔹 Entry Strategy:

• 67.00 as Key Support Level – Entry only if confirmed by a Green Elephant Bar with increasing volume.

• 71.50 as Hard Resistance – Immediate exit on approach unless volume supports a breakout.

• 65.50 as Hard Stop-Loss – Exit entirely if price falls below this level to prevent further drawdowns.

• 60.00 as Bargain Re-Entry Zone – Potential entry if price reaches this level and shows reversal confirmation.

🔹 Risk Management:

• Volume confirmation required before any entry.

• Stop-loss placement prioritizes capital preservation.

• Focus on real-time decision-making based on price action.

🔹 Main Objective: Capital protection and execution discipline, ensuring the strategy adapts dynamically to real-time market conditions.

📌 Full Analysis: Modified 10-Step Trading Strategy Scenario

• The Modified 10-Step Trading Plan: Enhancing Risk Management and Flexibility

---

2️⃣ Retracement Trading Strategy

🔹 Primary Focus: Retracement-based entry and exit levels using percentage-based zones to predict trend continuation or reversals.

🔹 Entry Strategy:

• 100% Retracement at 104.4 – Origin of power move (October 1, 2024).

• 75% Retracement at 95 & 55% Retracement at 88 – Trend Reversal Zones where price is likely to reject and reverse.

• 45% Retracement at 84 & 25% Retracement at 77 – Trend Continuation Zones, indicating where price could resume the downtrend.

• 0% Retracement at 68 – Current bottom of the power move, which is a potential reversal point.

🔹 Risk Management:

• Focus on retracement levels rather than hard stop-loss points.

• Entries and exits are predefined based on historical power moves.

• No immediate reliance on real-time volume confirmation for execution.

🔹 Main Objective: Strategic swing trading using price retracements to identify optimal trend continuation or reversal zones.

📌 Full Analysis: Retracement Trading Strategy

• Micro Stock Trader’s Adopted Retracement Trading Strategy

---

Key Differences Between the Two Approaches

Aspect	Modified 10-Step Trading Strategy	Retracement Trading Strategy
Trading Approach	Tactical, real-time trading decisions	Predefined retracement zones
Entry Criteria	Based on support/resistance levels & volume confirmation	Based on retracement percentages from prior moves
Risk Management	Hard stop-loss at 65.50, bargain entry at 60.00	No predefined stop-loss, relies on retracement zones
Focus	Active position management & dynamic adjustments	Swing trading with predefined reversal/continuation points
Main Strength	Adaptable to real-time market movement	Systematic approach using Fibonacci-style retracements

---

Conclusion: Which Strategy Is More Effective?

• The Modified 10-Step Trading Strategy is ideal for traders who prefer active trading, risk management, and real-time execution adjustments.

• The Retracement Trading Strategy is suitable for traders focusing on swing trading, predefined retracement-based entries, and trend-following.

• Combining elements of both strategies can provide a more well-rounded trading approach, using retracement zones as guides while executing based on the Modified 10-Step strategy’s real-time risk management.

📌 Which strategy do you prefer? Follow our live updates as we test both approaches in the BETA Trading Account! 🚀

---

Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.

Related Readings

• Micro Stock Trader: Week 2 Trading Update: Detailed Assessment and Outlook

• Micro Stock Trader: My Stock Trading Plan: Inspired by Oliver Velez’s 8-Step Strategy

• Micro Stock Trader Portfolio Tracker Page

• Micro Stock Trader: Revealed: Our Top 3 Shariah-Compliant Stocks for a Winning Portfolio

• Micro Stock Trader: Investing in Semirara Mining and Power Corporation (SCC): What the Technical Indicators Are Telling Us

• Micro Stock Trader: Investing in Monde Nissin Corporation (MONDE): What the Technical Indicators Are Telling Us

• Micro Stock Trader: Investing in Premiere Island Power REIT Corporation (PREIT): What the Technical Indicators Are Telling Us

• Micro Stock Trader: Investing in Asian Terminals Inc. (ATI): What the Technical Indicators Are Telling Us

Preparing for Week 4: Strengthening Downside Scenario Modeling and Volume Confirmation

Contents:

• 1. Strengthening Downside Scenario Modeling

• 2. Incorporating Volume Confirmation for Support & Resistance

• 3. Tactical Adjustments to Trading Strategy

• Final Takeaways for Week 4

As we move into Week 4 of live testing under the Budget Ethical Trading Account (BETA), our primary focus will be enhancing downside scenario modeling and incorporating volume confirmation for support and resistance levels. Week 3 highlighted critical areas where our trading strategy needed refinement, particularly in identifying weaker support levels and anticipating breakdowns more effectively. This post outlines key adjustments for Week 4 to improve execution and risk management.

Week 4 BETA Trading Scenario for URC: Key Support, Resistance, and Risk Management Strategy

---

1. Strengthening Downside Scenario Modeling

Lessons from Week 3:

• Our expectation of 77.07 as a strong support level did not hold, leading to a significant price breakdown.

• We lacked a structured downside contingency plan, resulting in an overly optimistic market expectation.

• Stop-loss placement worked as intended but could be further optimized to allow tactical re-entries.

Week 4 Adjustments:

✔ Model Multiple Downside Scenarios – Instead of relying on a single support level, we will create a tiered downside risk model based on past price action, volume shifts, and market sentiment. 

✔ Define Alternative Support Zones – A structured approach will identify probable support levels at 67.00 (weak support), 65.50 (hard stop), and 60.00 (bargain entry). 

✔ Tactical Stop-Loss Adjustments – Stops will be refined to protect capital while allowing flexibility for tactical re-entries if strong reversal signals appear.

---

Simulated Downside Scenarios & Tiered Support Modeling

We will now analyze three potential bearish scenarios to test our model’s response under different market conditions.

🔻 Scenario 1: Gradual Sell-Off & Controlled Decline

• URC price slowly declines toward 67.00 with low-to-moderate selling volume.

• At 67.00, if volume remains weak, we assume that the support level will not hold.

• Price continues drifting downward, hitting 65.50, triggering our hard stop-loss.

• If selling pressure persists, URC approaches 60.00, where we reassess for a re-entry opportunity.

Trade Action:

❌ No entry at 67.00 without volume confirmation.

🚨 Exit at 65.50 if downtrend continues.

✅ Consider tactical re-entry at 60.00 only if reversal patterns emerge.

---

🔻 Scenario 2: High-Volume Breakdown Below 67.00

• Price reaches 67.00 but with high selling volume, confirming further downside pressure.

• URC sharply declines to 65.50, showing no signs of reversal.

• Further institutional selling drives the price toward 60.00 within a short period.

• Support at 60.00 is tested, and volume increases significantly, signaling potential stabilization.

Trade Action:

❌ No entry at 67.00 due to strong bearish momentum.

🚨 Wait for volume stability at 60.00 before considering an entry.

✅ Look for a reversal candle (Green Elephant Bar) before re-entering.

---

🔻 Scenario 3: False Breakdown & Rapid Reversal

• URC breaches 67.00 momentarily, triggering stop-losses from weak hands.

• Suddenly, institutional buyers enter, reversing the price back above 67.00 with a strong green candle.

• Buying volume spikes, and price recovers toward 71.50, testing resistance.

• The stock consolidates between 67.00-71.50, forming a bullish structure.

Trade Action:

✅ Enter at 67.00 if strong buying volume appears.

✅ Hold position if recovery momentum continues.

🚨 Exit at 71.50 unless a confirmed breakout is supported by volume.

---

2. Incorporating Volume Confirmation for Support & Resistance

Lessons from Week 3:

• Key support levels failed because volume did not confirm buyer strength.

• High selling volume on January 14-16 reinforced the need for caution in calling support levels.

• Resistance levels lacked momentum confirmation, making breakouts less likely.

Week 4 Adjustments:

✔ Confirm Support & Resistance with Volume Trends – Any support level must be validated by higher-than-average buying volume. If price reaches support but volume remains low, we will delay entries to avoid premature positioning. 

✔ Monitor Institutional Selling Pressure – Large-volume sell-offs indicate stronger bearish control. If institutions continue offloading shares at high volume, we will adjust our trading expectations accordingly. 

✔ Use Volume to Confirm Breakouts – Instead of assuming resistance levels will break, we will wait for volume-backed moves above resistance before committing to breakout trades.

---

3. Tactical Adjustments to Trading Strategy

Key Level	Week 3 Expectation	Week 4 Assumptions and Revised Strategy
77.07	Expected strong support	Removed as a key level; now an invalidated support
71.50	Resistance level	Hard Resistance. Exit immediately on approach unless volume confirms strength.
67.00	Expected to hold	Weak Support. Entry only if confirmed by Green Elephant Bar + volume increase
65.50	Not previously considered	Hard Stop-Loss. New hard stop-loss to prevent deeper drawdowns. If price falls below this level, we exit entirely to limit losses.
60.00	Not previously considered	Bargain Re-Entry. Strategic re-entry zone for bargain hunting. If the market experiences a deeper sell-off, this level may offer an ideal entry.

---

Final Takeaways for Week 4

✅ Downside scenarios will be fully modeled, including tiered support levels.

✅ Volume confirmation will be required for any support/resistance validation.

✅ Stop-losses will be strategically adjusted for better tactical positioning.

✅ Breakout expectations will be managed conservatively with volume analysis.

By implementing these refinements, we aim to make more data-driven trading decisions while reducing exposure to unnecessary risks. Week 4 will serve as a key test of our ability to adapt to changing market conditions effectively.

📢 Stay tuned for next week's trading recap and insights as we put these refinements into practice!

---

Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.

Related Readings

• Micro Stock Trader: Week 2 Trading Update: Detailed Assessment and Outlook

• Micro Stock Trader: My Stock Trading Plan: Inspired by Oliver Velez’s 8-Step Strategy

• Micro Stock Trader Portfolio Tracker Page

• Micro Stock Trader: Revealed: Our Top 3 Shariah-Compliant Stocks for a Winning Portfolio

• Micro Stock Trader: Investing in Semirara Mining and Power Corporation (SCC): What the Technical Indicators Are Telling Us

• Micro Stock Trader: Investing in Monde Nissin Corporation (MONDE): What the Technical Indicators Are Telling Us

• Micro Stock Trader: Investing in Premiere Island Power REIT Corporation (PREIT): What the Technical Indicators Are Telling Us

• Micro Stock Trader: Investing in Asian Terminals Inc. (ATI): What the Technical Indicators Are Telling Us

Week 3 Scenario Modeling Assessment for URC: Refining Our Predictive Skills

Contents:

• 1. Comparing Our Week 3 Model vs. Actual Price Action

• 2. What We Did Well in Week 3 Scenario Modeling

• 3. Where We Can Improve Moving Forward

• 4. Key Takeaways for Future Scenario Modeling

• Conclusion: Building a More Adaptive Trading Approach

As we assess our scenario modeling performance for Week 3, it is important to evaluate how our projections aligned with actual market outcomes. By comparing our Week 3 Scenario Chart with the Week 3 Closing Chart, we can refine our predictive strategies and improve our execution in future weeks.

Week 3 Scenario Model for URC: Projected Support, Resistance, and Market Movement Analysis

URC Daily Chart at Week 3 Close: Evaluating Market Movement as of January 18, 2025

---

1. Comparing Our Week 3 Model vs. Actual Price Action

🔹 Expected Scenario (Week 3 Model)

• Probable Resistance: 80.70
• Probable Support: 77.07
• Target Breakout Zone: 85.00 (1/3 Zone)
• Stop-Loss Adjustment: 73.80

Key Assumptions in Our Model: 

✅ We expected URC to consolidate around the 77.07 support level before attempting a move toward 80.70.

✅ We projected that, if momentum built up, a potential breakout towards 85.00 could occur.

✅ Our updated stop-loss of 73.80 was positioned to protect against downside risks while allowing price action to develop.

---

🔹 Actual Market Movement (Week 3 Closing Chart)

• Closing Price: 68.60

• Support Failed: Price dropped significantly below 77.07 and even the stop-loss at 73.80.

• Bearish Momentum: URC fell sharply, breaching multiple support levels with increased volume.

• Moving Averages: The 20-day MA (76.37) failed to provide support, confirming further bearish sentiment.

Key Observations from the Actual Price Action:

🔻 The expected support level at 77.07 did not hold—instead, a strong breakdown occurred.

🔻 Stop-loss positioning (73.80) was breached, confirming the importance of having a rigid risk-management system.

🔻 Bearish volume surged, indicating strong selling pressure rather than a recovery attempt.

---

2. What We Did Well in Week 3 Scenario Modeling

✅ Incorporated Stop-Loss Adjustments: Our dynamic stop-loss strategy at 73.80 was a good move, as it prevented excessive drawdowns.

✅ Plotted Probable Resistance & Support Correctly: While price did not respect support, the levels were based on valid historical price action.

✅ Anticipated Key Market Zones: Our 1/3, 2/3, and 3/3 breakout zones correctly outlined potential bullish scenarios, even though the market ultimately moved in the opposite direction.

• Mid-Day Trading Reflection: January 16, 2025 – Lessons from the Tactical Action

• Transaction Costs and Tactical Adjustments – Refining Our Trading Plan

---

3. Where We Can Improve Moving Forward

🔸 1. More Focus on Downside Scenario Modeling

🔹 Our scenario focused heavily on a potential breakout but did not fully model a downside continuation scenario in the event of a breakdown.

🔹 Moving forward, we should build alternative scenarios that consider:

• A breakdown below key support levels (like what happened this week).
• Adjusting stop-losses dynamically based on trend weakness.
• Identifying lower probability, high-impact events (like a major support breach).

---

🔸 2. Incorporate Stronger Volume & Trend Analysis

🔹 The Week 3 Closing Chart showed a strong increase in selling volume, signaling high conviction from sellers.

🔹 Our future models should incorporate volume analysis to confirm or invalidate price setups.

🔹 If volume is declining while price is testing support, it may be a better indicator that the level is weak, helping us adjust our trade plan.

---

🔸 3. Refine Tactical Entry & Exit Decisions

🔹 Given the level of volatility, we should explore smaller tactical entries first instead of assuming a full position at a key level.

🔹 Consider layering into positions based on confirmation signals (e.g., if support holds for multiple days rather than entering immediately).

🔹 Transaction costs must also be factored in when making rapid adjustments to positions. (Read More)

---

4. Key Takeaways for Future Scenario Modeling

✔ Develop Multiple Scenarios – Avoid focusing too much on one primary expectation. Instead, create a bullish, neutral, and bearish model to prepare for any market movement.

✔ Use Volume Confirmation – Support and resistance are only valid if volume confirms the level. Next time, check whether buying volume supports price action before committing to a trade.

✔ Improve Stop-Loss Strategy – The hard stop-loss was effective, but a more dynamic approach (like a trailing stop) may help capture upside while protecting against deeper losses.

✔ Adjust Trade Execution – Future models should factor in smaller position entries rather than assuming full exposure immediately.

---

Conclusion: Building a More Adaptive Trading Approach

Week 3 provided valuable lessons on scenario modeling, stop-loss placement, and volume analysis. While our upside expectations did not materialize, our risk management approach helped mitigate major losses. Moving forward, more robust alternative scenario modeling and volume-based confirmations will enhance our strategy.

🔔 Next Steps:

• Improve downside risk scenario planning for better trade execution.

• Adjust position sizing strategy to allow for tactical entries.

• Use volume confirmation as a key factor in future market projections.

By refining these elements, our Week 4 model can become even more accurate and adaptable to market conditions! 🚀

---

Disclaimer: This post is for informational purposes only and should not be considered financial advice. Always do your own research before making any trading decisions.

Related Readings

• Micro Stock Trader: Week 2 Trading Update: Detailed Assessment and Outlook

• Micro Stock Trader: My Stock Trading Plan: Inspired by Oliver Velez’s 8-Step Strategy

• Micro Stock Trader Portfolio Tracker Page

• Micro Stock Trader: Revealed: Our Top 3 Shariah-Compliant Stocks for a Winning Portfolio

• Micro Stock Trader: Investing in Semirara Mining and Power Corporation (SCC): What the Technical Indicators Are Telling Us

• Micro Stock Trader: Investing in Monde Nissin Corporation (MONDE): What the Technical Indicators Are Telling Us

• Micro Stock Trader: Investing in Premiere Island Power REIT Corporation (PREIT): What the Technical Indicators Are Telling Us

• Micro Stock Trader: Investing in Asian Terminals Inc. (ATI): What the Technical Indicators Are Telling Us