Today I want to explain to you one of the most accurate trading strategies
Nothing works 100% correct in the market. But 70 – 80% is the high accuracy. Certainly, a lot depends on how you manage your money. Therefore, using the same strategy, traders get different results. But we will talk about money management later.
Let’s focus now on the Oops trading strategy
, which made me good returns on managed accounts
. Why oops? – Well, I didn’t name it. But I guess all because this strategy is based on how big boys use crowd emotions and psychology to trap them. Usually, it happens as a result of some ‘noise news’. Hence, if the market opens considerably lower or higher than yesterday’s range, it is an indication of retailers’ panic or greed accordingly. This provides a great opportunity for big players to use the retailers’ emotions against them by placing a contrarian trade and earn profits. In a few words, it’s a gap trading strategy and the gap is the result of the opinion of the average crowd. Soon, retailers realize they made mistake… Oops!
As most of the strategies I use, this one works for swing traders. I am not a big fan of day trading.
It is very easy to identify oops pattern in the chart:
1. The daily bar opens below the previous day’s low.
2. Or when the daily bar opens above the previous trading day’s high.
Here is how to buy oops trading strategy (opposite works for sell)
1. First I would like to pay your attention, that this pattern works for stocks and commodities. So, we look for instruments that have been in an upward trend but have experienced a recent pullback. In other words, the oops strategy gives the best accuracy in the accumulation phase, when big players are trying to wash out retailers. Very often, when institutions accumulate positions, they will pause, and even sell, for several days in order to shake out the small investors and avoid the price running away from them. No need to look for an oops pattern if the market is bouncing in the channel. It will not work simply.
2. During the last stage of the downtrend, the market needs to gap down way below yesterday’s low. This gives rise to the OOPS buy signal.
3. As reevaluation by investors happens, the price starts rising and crosses yesterday’s low and yesterday’s close. This generates the buy signal and a long trade should be initiated here.
4.The Stop-Loss is below the low of the same day.
Explained. Written by Inna Rosputnia, Lady F Trader