Mastering Malaysian SNR Trading: A Comprehensive Guide

Understanding Malaysian SNR Trading

Malaysian SNR (Support and Resistance) trading is a unique approach that differs from traditional support and resistance methods. Instead of focusing on areas that have rejected price multiple times, Malaysian SNR trading revolves around key levels. This guide will delve into the intricacies of this trading method, providing you with the knowledge to implement it effectively.

Types of Key Levels

In Malaysian SNR trading, there are three primary types of key levels:

1. The Gap
2. The A Level
3. The V Level

Let's examine each of these in detail.

The Gap

To identify a gap, you need to look at two consecutive candlesticks of the same color. Mark the closing price of the first candlestick. This point becomes your gap level.

The A Level

An A level is formed when you have a bullish candlestick followed by a bearish candlestick. The closing price of the first (bullish) candlestick marks the A level. It's called an A level because when viewed on a line chart, it forms the shape of the letter A.

The V Level

The V level is the opposite of the A level. It's formed when a bearish candlestick is followed by a bullish candlestick. On a line chart, this formation resembles the letter V.

Fresh vs. Unfresh Levels

In Malaysian SNR trading, the concept of fresh and unfresh levels is crucial. This concept is similar to the idea of mitigated and unmitigated levels in Smart Money Concepts (SMC) trading.

• A level is considered fresh when it hasn't been touched by price action or when price breaks through it after being previously touched.
• A level becomes unfresh when it's touched by a price wick.

For example, if you have a gap level and price action touches it with a wick, that level becomes unfresh. However, if the next candle closes above the level, it becomes fresh again.

Understanding the Storyline

The storyline in Malaysian SNR trading refers to the directional bias on higher timeframes. Typically, traders focus on the daily and weekly charts for this purpose.

A key principle to remember is that price typically travels from one fresh level to another on higher timeframes. For instance, if price is approaching a daily level, it may start a bearish storyline from that level and move towards another daily level below.

Signs of a Starting Storyline

There are several signs that indicate the potential start of a storyline:

1. Rejection (5% probability): When price rejects from a key level, it's a sign that a new storyline might begin.

2. H4 Breakout: Look for an external breakout on the 4-hour chart. This breakout should occur at an A level created before the daily level was touched.

3. H1 Breakout during New York Session: For a faster entry, you can look for a 1-hour chart breakout during the New York trading session. This creates a "mini storyline" that targets the next H4 fresh level rather than the next daily level.

Entry Strategies

Once you've identified the start of a storyline, the next step is to plan your entries. Here's how you can do this effectively:

1. Identify H4 Levels: As price moves in the direction of the storyline, it creates new levels on the 4-hour chart. These can be gaps, A levels, or V levels.

2. Refine to H1: Don't enter based solely on H4 levels. Refine these levels to the 1-hour chart for more precise entries.

3. Look for Pullbacks: Price tends to pull back to these newly created levels before continuing in the direction of the storyline.

4. Use Continuation Entries: Each new level created on the H4 can be used as a continuation entry point.

5. Set Stop Loss: A typical stop loss for these entries is around 24 pips.

6. Define Targets: Your target should be the next daily level, or the next H4 level if you entered based on an H1 New York session breakout.

Advanced Technique: Consequent Encouragement

For more experienced traders, the concept of "consequent encouragement" from Smart Money Concepts can be incorporated into Malaysian SNR trading. This technique allows for tighter stop losses and potentially higher risk-to-reward ratios.

Here's how to use consequent encouragement:

1. After identifying a daily rejection and H4 breakout, mark the 50% level of the daily candle's wick.

2. If this 50% level is above the A level you've identified for entry, use the 50% level as your entry point instead.

3. If the A level is above the 50% level, enter at the A level.

4. Use a tighter stop loss of about 7 pips (5 pips plus 2 for spread).

This technique can be particularly effective for traders looking to flip accounts with high leverage, but it requires careful risk management to avoid significant drawdowns.

Practical Application of Malaysian SNR Trading

Now that we've covered the theoretical aspects of Malaysian SNR trading, let's look at how to apply these concepts in real-world trading scenarios.

Identifying Key Levels

The first step in Malaysian SNR trading is to identify key levels on your charts. Start with higher timeframes like the daily and weekly charts, then move down to the 4-hour and 1-hour charts.

1. Look for Gaps: Scan for two consecutive candles of the same color. Mark the closing price of the first candle.

2. Identify A and V Levels: Look for bullish candles followed by bearish candles (A levels) and bearish candles followed by bullish candles (V levels).

3. Use Line Charts: Switch to line charts to easily visualize A and V levels. The shapes will be more apparent in this view.

4. Mark Fresh Levels: Pay special attention to levels that haven't been touched or have been recently broken through, as these are considered fresh.

Analyzing the Storyline

Once you've identified key levels, the next step is to analyze the market's storyline:

1. Start with Higher Timeframes: Look at the daily and weekly charts to get an overall sense of market direction.

2. Identify Potential Turning Points: Look for fresh daily levels where price might change direction.

3. Watch for Rejection: If price rejects from a key level, it could indicate the start of a new storyline.

4. Look for Breakouts: Monitor the 4-hour chart for external breakouts, which can confirm the start of a new storyline.

5. Consider H1 Breakouts: For faster entries, look for breakouts on the 1-hour chart during the New York session.

Planning Your Entries

With key levels identified and the storyline analyzed, you can start planning your entries:

1. Wait for Pullbacks: After a breakout, wait for price to pull back to a newly created H4 level.

2. Refine Entry Points: Use the 1-hour chart to refine your entry point for greater precision.

3. Use Continuation Entries: As new H4 levels are created in the direction of the storyline, use these for additional entry opportunities.

4. Apply Consequent Encouragement: For tighter entries, consider using the 50% wick level from the daily candle.

5. Set Appropriate Stop Losses: Use a 24-pip stop loss for standard entries, or a tighter 7-pip stop when using consequent encouragement.

6. Define Clear Targets: Aim for the next daily level, or the next H4 level if you entered based on an H1 breakout.

Risk Management

Proper risk management is crucial in any trading strategy, and Malaysian SNR trading is no exception:

1. Position Sizing: Never risk more than 1-2% of your account on any single trade.

2. Use Appropriate Leverage: While high leverage can amplify gains, it also increases risk. Use leverage responsibly.

3. Monitor Drawdowns: Keep track of your account's drawdown. If using high leverage, be particularly vigilant about potential losses.

4. Use Stop Losses Consistently: Always use stop losses to protect your account from unexpected market moves.

5. Take Partial Profits: Consider taking partial profits as your trade moves in your favor, securing some gains while letting the remainder run to your final target.

Common Mistakes to Avoid in Malaysian SNR Trading

As with any trading strategy, there are potential pitfalls to be aware of when using Malaysian SNR trading:

1. Overtrading: Don't feel compelled to enter every potential setup. Wait for high-probability trades that align with your analysis.

2. Ignoring the Higher Timeframe Context: Always consider the bigger picture on daily and weekly charts before entering trades on lower timeframes.

3. Misidentifying Key Levels: Take time to practice identifying gaps, A levels, and V levels correctly. Misidentification can lead to poor trade setups.

4. Neglecting to Check Level Freshness: Remember that the freshness of a level is crucial. Don't trade off unfresh levels.

5. Entering Without Confirmation: Wait for proper confirmation (like breakouts) before entering trades, rather than anticipating moves.

6. Using Inappropriate Stop Losses: Stick to the recommended stop loss sizes unless you have a compelling reason to deviate.

7. Ignoring Market Conditions: Be aware of major economic events or news that could disrupt normal price patterns.

Enhancing Your Malaysian SNR Trading

As you become more comfortable with the basics of Malaysian SNR trading, consider these advanced techniques to enhance your trading:

Incorporating Multiple Timeframe Analysis

While Malaysian SNR trading primarily focuses on the H4 and H1 charts for entries, incorporating analysis from even higher timeframes can provide valuable context:

1. Monthly Chart: Use the monthly chart to identify long-term trends and major support and resistance areas.

2. Weekly Chart: The weekly chart can help you spot potential turning points in the market that might not be visible on lower timeframes.

3. Daily Chart: Use the daily chart to confirm the overall market direction and identify key levels for potential storyline starts.

Combining with Other Technical Analysis Tools

While Malaysian SNR trading is powerful on its own, combining it with other technical analysis tools can provide additional confirmation for your trades:

1. Trend Lines: Drawing trend lines on higher timeframes can help you identify the overall market direction and potential breakout points.

2. Moving Averages: Using moving averages in conjunction with key levels can provide additional support and resistance areas.

3. Fibonacci Retracements: Fibonacci levels often align with key SNR levels, providing additional confirmation for potential reversal points.

4. Volume Analysis: Incorporating volume analysis can help confirm the strength of breakouts and the validity of key levels.

Adapting to Different Market Conditions

Malaysian SNR trading can be effective in various market conditions, but it's important to adapt your approach based on the current market environment:

1. Trending Markets: In strong trends, focus more on continuation entries and be cautious about counter-trend trades.

2. Ranging Markets: In sideways markets, pay more attention to reversals at key levels and consider taking profits more quickly.

3. Volatile Markets: During high volatility, consider widening your stop losses and being more selective with your entries.

4. Low Volatility Markets: In periods of low volatility, you might need to be more patient waiting for setups and consider using tighter profit targets.

Developing Your Malaysian SNR Trading Plan

To successfully implement Malaysian SNR trading, it's crucial to develop a comprehensive trading plan. Here are key elements to include:

1. Define Your Trading Goals: What are you aiming to achieve with Malaysian SNR trading? Set realistic, measurable goals.

2. Specify Your Trading Timeframes: Which timeframes will you focus on for analysis and execution?

3. Outline Your Entry Criteria: Clearly define what conditions must be met for you to enter a trade.

4. Set Risk Management Rules: Determine your position sizing, maximum risk per trade, and overall risk tolerance.

5. Establish Exit Strategies: Define your criteria for taking profits and cutting losses.

6. Create a Trading Schedule: Decide when you'll analyze the markets and execute trades.

7. Plan for Continuous Improvement: How will you review and refine your trading performance?

Conclusion

Malaysian SNR trading offers a unique approach to the financial markets, combining elements of support and resistance trading with concepts from Smart Money trading. By focusing on key levels, storyline analysis, and precise entry techniques, traders can potentially identify high-probability trading opportunities.

However, like any trading strategy, Malaysian SNR trading requires practice, patience, and discipline to master. It's crucial to thoroughly understand the concepts, practice identifying key levels and storylines, and always maintain proper risk management.

Remember, successful trading is not just about the strategy you use, but also about your mindset, emotional control, and overall approach to the markets. Continuously educate yourself, review your trades, and refine your approach based on your results.

With dedication and consistent application of the principles outlined in this guide, you can work towards becoming a proficient Malaysian SNR trader. Always start with a demo account to practice and gain confidence before risking real capital. Happy trading!

Article created from: https://www.youtube.com/watch?v=y1jJuJsO-zw