© 2020 BGG

Ticino Method




Ticino Method

January 2020

1 Basic rules

1.1 MML levels

  • 0/8 and 8/8 level are the strongest support & resistance levels
  • 1/8 and 7/8 level quickest reversal
  • -1/8, -2/8 and +1/8, +2/8 are extremely oversold / overbought levels
  • 3/8 & 5/8 is the trading range or pipe
  • 4/8 level is the main support & resistance level and used as the main target
  • 2/8 and 6/8 level can also be used as a target

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Figure 1: MML levels


1.2 General

  • Short-trades: Overbought area: +7/8, +8/8, +1/8
  • Long Trades: Oversold Area: 1/8, 0/8, -1/8
  • Masterframe (100, 1.000, 10.000, 100.000) is used based on the underlyings value (e.g. CL = $60:
    masterframe 100)
  • New MM frame: Underlying reaches ± 2/8 level and adjusts therby for the underlying volatility
    Also decrease of MML spread (lower volatility)?
  • Better signal if levels are confirmed on multiple time levels (8, 16, 32…)
  • Timeframe and chart used for market entry is used for the lifetime trade management (stops, targets,
    pyramiding…)
  • There is no “best” frame
  • No continuous contracts are used
  • Check setups on different contracts of the same underlying (e.g. ZWZ19, ZWH20)
  • Expiration of contracts: If a contract will be rolled in the same month, a new trade will not be opened,
    or profits will be taken earlier (2/8 instead of 4/8)
    Example: KCH20 will be rolled on Feb 11th, no trade is initiated in Februay.
  • Rolling of contracts: Trades are not rolled, because this would mess up the risk management. If a
    contract expires, then the trade will be closed. Trades on longer (128+) timeframes should be done on
    contracts with a later expiration due to the potentially longer holding period

2 Trading

2.1 Entry

Candle stick patterns
One candle stick pattern has to occur, followed by a good close (trigger bar)

  • Swift: Long bodies and longer tails and the body is very close to the level
    Bird bodies are sitting on a price level
  • Wick touch: Price is rejected from level
  • Definition of good close
    Bullish setup: Bullish bar & close above entry level
    Bearish setup: Bearish bar & close below entry level
  • Doji bars are also valid as a good close. Open and close can deviate by a couple of ticks
    https://ticinotrader.slack.com/archives/GT76KL4PN/p1581401063011200
  • Good close = inside bar: Preference to not take the trade
  • ST trades: Place limit order exactly on the MML level
  • LT trades: Place the order a couple of ticks away from the level (3 ticks)
  • Cancel order after almost full movement
    https://ticinotrader.slack.com/archives/GT76KL4PN/p1580888844003600]
  • Cancel order when the next level is hit
  • Place new limit orders just after the open to avoid gaps (e.g. meats), for other markets place the orders in the
    european morning
  • 5-day-rule: Applies also for earlier trigger bars and therefore new trades can not be done, see
    https://ticinotrader.slack.com/archives/GT76KL4PN/p1581401669012800

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Figure 2: Swift pattern

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Figure 3: Wick touch
pattern

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Figure 4: Example swift
pattern

2.2 Risk & Money Management

By entering the limit order of the trade, immediatly place stop-loss and target orders

2.2.1 Stop-loss
  • Maximum and regular SL = 50% MM spread
  • Compare spread of MM and ATR.
  • Spread ∼ ATR: use 50% stop
  • Spread / ATR > 2: use 25% stop (Baby MML)
  • Break-even: if the price hits the next level (e.g. enter @8/8, hits 7/8), adjust the stop to break-even
  • Adjust to 50% level: after a good close at the next MML level, adjust the stop to 50% behind this level
  • Risk is always the same in USD. Calculate the number of contracts with the USD risk and the number of
    ticks between entry & stop-loss level. Maximum risk is around 0.5% to max. 1.0%
Risk Condition
0.3% Short trade and premium
0.5% Standard size
0.75% Supported by fundamental data

Table 1: Risk table

2.2.2 Exit

The take profit strategy is planned in advance and will not be changed during the trade.

  • Bad close: exit the trade immediatly on the initial position
  • 5-day rule: If the market stays in a sideway move 5 days after the trigger bar, see 5:
    a) delete order if not filled or b) set stop to breakeven or c) exit the trade
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    Figure 5: 5-day rule


  • Target limit: Target is always the 4/8 level, more aggressive variant is the 2/8 (short trade) or 6/8 (long trade)
    level
    If the initial trade is opened with e.g. 2 contracts, half the position will be targeted towards the 4/4 level, the
    other half to the 2/8 or 6/8 level. In this case it is allowed to keep on adding to the position until the final
    target.

Basic targets (Training 1, 2:15)

  • Basic targets: 2 MM levels
  • Exception: Trade @ 1/8 or 7/8: take 4/4 as the target (3 MM levels)

2.3 Pyramiding

2.4 Strategies

2.4.1 Confluence

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Figure 6: Strategy: Confluence

2.4.2 50% overshoot

Highest quality setup

  • Price reverses @ 50% level above any odd level (e.g. 5/8, 7/8…)
  • This overshoot price level has to match 1 or more 1/8 or 7/8 level in a smaller frame for a very good setup
  • The best combination is a reversal of a green + 50% level & 1-2 yellow levels in a smaller frame
  • Example: https://ticinotrader.slack.com/archives/GT76KL4PN/p1581489229002200

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Figure 7: 50% overshoot larger frame

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Figure 8: 50% overshoot smaller frame

2.4.3 Standalone
  • Setup occurs on 128 frame or higher
  • Large spread is required with a 25% stop
  • These signals occur mostly after a frame shift
  • No further confluence levels are required
  • Entry mostly @+1/8, -1/8, 7/8, 1/8 level

2.4.4 ToD: 3 timeframes

Training #01, 3:40. This can also be a weekly bigger timeframe setup and excecuted on a 4h chart. Or basic idea on
monthly chart and execution on the daily timeframe.

  • Same MM frame (e.g. 64) is observed across different timeframes (e.g. dly, 60M…)
  • Daily level is used as an anchorpoint and traded on a smaller timeframe

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Figure 9: Strategy: 3T

  • Significant reference points:
    Daily OHLC, Swing H/L, Confluence.
    Above / below the most recent highs / lows are normally a lot of stop orders placed
  • Transfer of trade locations:
    Significant price action at MML level on a higher timeframe (e.g. 7/8) is often confluent with a different
    level on a smaller timeframe (e.g. 8/8).
  • Combination with 4h footprint:
    Good level e.g. on daily chart is reached, but not a valid entry signal yet. Convenient combination can be
    to look for entries on the 4h footprint chart.
  • Position size:
    Stop size can be significantly smaller on the smaller timeframes. One option is to take part of the position
    and trade it on the larger timeframe targets.
  • Ideal setup:
    Rejection of a MML level with clear price action, look for an entry on a shorter timescale (Example:
    KCH20 November 2019, Training #02, 3:29)
2.4.5 Trade of the week

Training #01, 3:44.
Example on RBJ20: Multiple rejections on a weekly timeframe (50% overshoot, multiple 7/8 levels…). Look for these
significant price levels on a shorter timeframe. Training #02, 1:27.

2.4.6 Retired style

Training #02, 1:22.
Main levels are picked from a weekly chart and traded on a daily or 4h chart.

3 Examples

3.1 GGH20 – Euro Bund

  • 3 confluence levels (32, 16, 8)
  • Spread = 0.78, ATR = .78: 50% stop

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    Figure 10: Example GGH20


3.2 ZLH20 – Soybean oil

Multiple confluence levels @+1/8, extreme bearish CoT data

1.
Good close, but 8/8 level was immediatly hit and order is deleted
2.
New good close, place limit @ +1/8
3.
Order filled
4.
Good close, adjust stop to 50% and place new limit order @ 8/8
5.
Order filled @8/8
6.
New good close, adjust stop to 50% and place new limit order @ 7/8
7.
Order filled and immediatly new good close, place new order @ 6/8, all stops adjusted.
8.
All positions stopped out, total R = 5 + 3 + 1 – 1 = 8

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Figure 11: Example ZLH20


3.3 ESH20 – E-MINI S&P 500 Futures

Perfect intraday setup, but so-so longterm setup. The candle has to not reached the MML level. Check Training #02 1
Min

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Figure 12: Example ESH20

3.4 Example ideas

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Figure 13: Example ZCN20

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Figure 14: Example USDCAD

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Figure 15: Example ToD ZBH20

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Figure 16: Example ZRK20 Overshoot

4 Appendix

4.1 Checklist

Trade entry

  • Lead-up/down (2/8)
    Sideway movements should be avoided, there should be at least a 2 spread movement to trade against this
    move
  • Reversal/Exhaustion
    Reversal or exhaustion candle signal must occur before entering a trade. ST and WT pattern?
  • Avoid steamroller moves
  • Good & bad close
    To enter a position a good close is required. In case of a bad close afterwards, immediatly close position
  • Confluence & Overshoot
  • Inside day
    These patterns are entirely skipped, wait for a good close
  • MM spread for correct stop calculation
  • Trade after the close only
  • Too late (BE target hit)
    Before we were able to enter the trade, the price already hits the next MM level (BE stop adjustment).
    The order is canceled.
  • Place of stop (yellow lines)
    Stop levels are watched on smaller timeframes. In case of a stop-out check for opportunities on a smaller
    MM frame for shortterm trades
  • Big bearish / bullish bars
    Bars that are wider than 2 or 3 MM spreads, avoid to go against them

Trade management

  • Stop placement
  • Bad close
    Exit trade before the close of the day
  • 5 bar rule
    5 bars after the position was entered and the price does not move, it is a sign for accumulation and not
    reversal. Place stop-loss to break-even or exit position.
    If the position was not entered yet and the price moves sideways, the order will be canceled as well
  • Breakeven
    Price hits the next MM level on the initial trade, stop will be break-even
  • Monitoring & Alerts
    In general: Check the chart once every period (e.g. daily setup: daily check, weekly setup: weekly check…)
    1st Alert: Price hits the next level and stop is adjusted to break-even
    2nd Alert: ??
  • Stop trailing
  • Pyramiding
  • Final target
    Final target is always defined before entering the trade and will never be changed

5 ToDo

Exampels to be checked…

  • At significant reversal or price action points, the same traders will probably still be there and do something
    Training 02, Min 1:25
  • RBH20
    Training #02, 1:29.
  • Combination Market Profile
    Training #02, 2:40

5.1 Speedlines and steamrollers

5.2 Other

5.3 Trading range

Training 1, 2:03
Bullish bias: Close above 5/8, high probability of an upmove in the near future
High probability of retest of 4/8 and 3/8 before bullish continuation Bearish bias: Close below 3/8, high probability
of a downmove in the near future
High probability of retest of 4/8 and 5/8 before bearish continuation