Only trade in the direction of the trend (the trend is given by the 3 MLs - when all 3 are below price and green - trend is up. When all 3 are above price and red - trend is down).
When FGSI/IGSI get below 30, start looking for a trade long.
For shorts - FGSI/IGSI above 80.
Additional entry rules:
For longs, in addition to the 1st pre-condition of FGSI below 30:
- IGSI needs to be below 50 (if strong up trend, 54 can be used)
- when both are below 30, it's a high probability trade
- pretty much any buy signal will work (a SE, or a TL that gets broken, a cycle support lvl etc), you don't have to wait for FGSI to turn up, but you can if you want to have confirmation of a turn. (ideally near 20 or lower), then buy.
Risk management rules:
- initial stop is very wide (30-40 points)
- initial target is FGSI to hit 50 (or the low before it ticked up + 40 points)
- when FGSI hits 50, you move your stop to reduce your risk. Either to b/e or small loss or even in profit, based on how much price moved. Depending on where IGSI is (if it's below 50, then you don't have to be aggressive with the stop, as the mkt could run).
- also when FGSI hits 50, you must take profits (partial or fully). if you have a lot of points of profits, you can instead run a trailing stop. if you have only a few points profit or even a loss, you should take it and close the trade as downside might not be done yet (buyers inefficient).
- if IGSI is below 50, you can let the trade run, at least until IGSI gets to 50 or higher
- if FGSI continues to run higher, next targets are FGSI 80 and then extreme optimism. Same for IGSI.
Note: The market should respond quickly, usually within 5min. if that doesn't happen and GSIs start ticking down again, then it's likely price will make lower lows. if that happens, then just get out and wait for next set up.