We are excited to introduce the NEW Rainbow Strategy.
We’ve been having tremendous success with the new Rainbow Trade Strategy!
The theory behind the Rainbow Strategy is when all of the EMAs (Exponential Moving Averages) are lined up in the correct sequence and they are spread out sufficiently, that means that the market is in a hyper trend phase (illustrated in the light blue shaded area). During this phase of the market, any pullback to the EMAs, will be interpreted by the market as a “buy the dip” for long trades or “dead cat bounce” for short trades. Therefore, we will be able to accumulate our positions on retracements to the EMAs (represented by the different colors of the Rainbow, hence the name) and the market will make at least one more attempt to test the previous high or previous low before reversing trend entirely and we will be able to get out with a profit before the trend reversal fully takes effect. Note: This strategy requires more capital due to the fact that you will need to be able to add to your position at the various EMA levels upon pullback. I recommend you have at least $2,000 of capital per contract traded for each level that you are willing to add to your position in order to be able to trade the NQ or YM for every 1 Contract you are planning to start your trade since you will need to be able to withstand the drawdown of multiple contracts as you enter on the pullback as required. That means if you are planning on adding up to 7 levels for example, then you should have at least $14,000 of capital if you are trading in 1 contract lots. You can choose how many levels and which levels you want to add. This should ensure you have sufficient capital for multiple contracts and the negative drawdown associated with having to add at these levels as the market moves against you initially until the market attempts to retest the previous high or low. The capital requirements will be higher for contracts that have a higher tick value such as ES, Oil or gold.
The setup will remain in effect until the market finally hits the 50 EMA retracement level. After that trade is closed, the pre-requirements of EMA distances must be met again before the strategy will take the next trade.