3LS | 3 Line Strike Strategy [Kintsugi Trading]

2. Aug. 2022

What is the 3LS | 3 Line Strike Strategy?

Incorporating the 3 Line Strike candlestick pattern into our strategy was inspired by Arty at The Moving Average and the amazing traders at TheTrdFloor.
The Three Line Strike is a trend continuation candlestick pattern consisting of four candles. Depending on their heights and collocation, a bullish or a bearish trend continuation can be predicted.




In a symphony of trend analysis, price action, and volume we can find and place high-probability trades with the 3LS Strategy.


How to use it!

----- First, start by choosing a Stop-Loss Strategy, Stop PIP Size, and Risk/Reward Ratio -----

- Stop-Loss Strategy

• Fixed PIP Size – This uses the top/bottom of the indicator candle and places a TP based on the chosen Risk:Reward ratio.
  
• ATR Trail (No set Target Profit, only uses ATR Stop)
  
• ATR Trail-Stop (Has set Target Profit, however, stop is based on ATR inputs)
  **If you choose an ATR Stop-Loss Strategy - input the desired ATR period and Multiple you would like the stop to be calculated at**
  **ATR Stop-Loss Strategies have a unique alert setup for Auto-Trading. See Auto-Trading Section**
  
  - Risk/Reward Ratio = If you have a .5 risk/reward, it means you are risking $100 to make $50.
  - Additional Stop PIP Size = Number of PIPs over the default stop location of the top or bottom of the indicator candle.
  
  ----- Next, we set the Session Filter -----
  
  Set the Timezone and Trade Session you desire. If no specific session is desired, simply set the Trade Session to 00:00 - 00:00.
  
  ----- Next, we set the Moving Average Cloud Fill -----
  
  Enter the Fast and Slow Moving Average Length used to calculate trend direction:
  
  • MA Period Fast
    
  • MA Period Slow
    
    These inputs will determine whether the strategy looks for Long or Short positions.
    
    ----- Next, we set the VSA – Volume Spread Analysis Settings -----
    
    Check the box to show the indicator at the bottom of the chart if desired.
    
    This is just a different visual output of the VSA | Volume Spread Analysis [Kintsugi Trading] indicator available for free under the community indicators tab. You can add that indicator to your chart and see the same output in candle format.
    
    In combination with the Moving Average Cloud, the Volume Spread Analysis will help us determine when to take a trade and in what direction.
    The strategy is essentially looking for small reversals going against the overall trend and placing a trade once that reversal ends and the price moves back in the direction of the overall trend.
    The 3LS Strategy utilizes confirmation between trend, volume, and price action to place high probability trades.
    
    The VSA is completely customizable by:
    
    • Moving Average Length
      
    • MA-1 Multiplier
      
    • MA-2 Multiplier
      
    • MA-3 Multiplier
      
    
    
    Check out the VSA | Volume Spread Analysis [Kintsugi Trading] indicator in the community scripts section under the indicators tab to use this awesome resource on other strategies.
    
    ----- Next, we have the option to view the automated KT Bull/Bear Signals -----
    
    Check the boxes to show the buy-sell signal on the chart if desired.
    
    ----- Next, we set the risk we want to use if Auto Trading the strategy -----
    
    I always suggest using no more than 1-3% of your total account balance per trade. Remember, if you have multiple strategies triggering per day with each using 1%, the total percent at risk will be much larger.
    For Example – if you have 10 strategies each risking 1% your total risk is 10% of your account, not 1%! Be mindful to only use 1-3% of your total account balance across all strategies, not just each individual one.
    
    ----- Finally, we backtest our ideas -----
    
    After using the 'Strategy Tester' tab on TradingView to thoroughly backtest your predictions you are ready to take it to the next level - Automated Trading!
    This was my whole reason for creating the script. If you work a full-time job, live in a time zone that is hard to trade, or just don't have the patience, this will be a game-changer for you as it was for me.
    
    Auto-Trading
    
    When it comes to auto-trading this strategy I have included two options in the script that utilize the alert messages generated by TradingView.
    *Note: Please trade on a demo account until you feel comfortable enough to use real money, and then please stick to 1%-2% of your total account value in risk per trade.*
    
    AutoView
    PineConnector
    
    
    
    
    **ATR Auto-Trading Alert Setup**
    
    How to create alerts on 3 Line Strike Strategy
    
    For Trailing Stops:
    1) Adjust autoview/pineconnector settings
    2) Click "add alert"
    3) Select "Condition" = Strategy Name
    4) Select "Order Fills Only" from the drop-down
    3) Remove template message text from "message" box and place the exact text. '{{strategy.order.alert_message}}'
    4) Click "create"
    
    
    For Fixed Pip Stop:
    1) Adjust autoview/pineconnector settings
    2) Click "add alert"
    3) Select "Condition" = Strategy Name
    4) Select "alert() function calls only"
    5) I like to title my Alert Name the same thing I named it as an Indicator Template to keep track
    
    Good luck with your trading!