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Mastering the Box Theory

  From 6 Years of Losses to Six-Figure Profits: Mastering the Box Theory If you’ve been struggling with trading, you’re not alone. Many spent six or more consecutive years in a cycle of frustrating and humiliating losses. Me was grinding every day, studying endless charts, only to watch my hard-earned money vanish into the market. Everything changed when I discovered a simple strategy called the Box Theory . Over the last eight months, I’ve seen hundreds of traders use this exact method to turn their fortunes around. Here is how you can use it to find consistency in any market—whether it’s Bitcoin, Forex, or the NIFTY. Step 1: Set Up Your "Naked" Chart The pros always start with a Daily Chart . The reason is simple: the daily timeframe has the highest concentration of liquidity. This is where the most significant activity happens and where your chances of making a profit are highest. To start: Open a daily chart of your chosen asset. Ensure it is a "naked" chart —no...
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Unlocking the Power of the 20-40 Concept for Trading

 Unlocking the Power of the 20-40 Concept for Trading

Hey guys, welcome back! I hope you've been learning and practicing all the strategies we’ve covered so far. Today, we’re going to dive into something more advanced — the 20-40 Concept. If you’re familiar with the previous blogs, you know that this is level three content. But don’t worry, I’m here to break it down for you step by step. Stick with me, and you’ll understand how this strategy works wonders in multiple markets, whether you're trading crypto, forex, or US market segments.

The Power of the 20-40 Concept

In our last blog, we explored the CO Concept and I explained the logic with examples. Now, let’s take a closer look at the 20-40 Dancing Area. This is a trading strategy used by professional traders who are waiting for swing trades, and believe me, it works across all markets. Whether you're into crypto or traditional stock markets, you can apply these principles with success.

Let’s break down the 20-40 Concept:

  • The blue line represents the 20 SMA (Simple Moving Average).
  • The orange line represents the 40 SMA.

The key idea here is simple: when the 20 SMA crosses the 40 SMA, that’s when we start planning our moves. But here’s the catch — we don’t just jump into trades when the crossover happens. Let’s go deeper into this strategy.

Understanding the 20-40 Area

There are certain zones in the market where things get interesting. These are the “dancing areas” I’m talking about. When a crossover happens, don’t play games. Focus on identifying the right pattern. Here’s the crucial step:

You need to look for two soldiers — this refers to candlestick patterns I’ve discussed earlier, specifically the Lion’s Paw Part One and Lion’s Paw Part Two. These patterns, when found in the 20-40 area, are powerful indicators that you can use to take action.

After you spot these patterns, the next step is simple: wait for a green candle to appear. Once the price moves above this green candle, that’s your cue to buy. This strategy works for both intraday and swing trading.

Why 20-40?

You might be wondering: why not use a 30 SMA instead of the 40 SMA? Well, the 40 SMA adds a level of stability to the 20 SMA. This combination helps us filter out the noise and focus on the bigger picture. I know this is level three content, but trust me, once you grasp this, you’ll see how powerful the 20-40 concept truly is.

In upcoming blogs, I’ll explain in more detail how to identify the price moment when the price will either rise or fall from these zones. This will be the foundation of your trading strategy.

The Angle of the 20-40 Crossover

There’s another key factor to consider: the angle of the crossover. When the 20-40 crossover happens, an angle is formed. This angle should look like this:

  • If the angle is upward, it indicates an uptrend.
  • If the angle is downward, it indicates a downtrend.

This is crucial because the strength of the crossover is determined by the angle. If the crossover is happening at a steep angle, the trend is likely to continue in that direction. If it’s more shallow, you might want to be cautious.

Using 20-40 for Trend Identification

Here’s a critical part of the strategy: do not trade against the trend. If the 20 SMA crosses above the 40 SMA and the angle is upwards, you should only look for buy opportunities. On the other hand, if the 20 SMA crosses below the 40 SMA and the angle is downward, it’s time to sell.

Here are a few real examples:

  • Axis Bank Example: When the market shows a downtrend, you wait for the price to return to the 20-40 area. If the 20 SMA crosses below the 40 SMA, you can enter a sell position.
  • Auro Pharma Example: When the trend changes to an uptrend, the 20 SMA crosses above the 40 SMA, and you enter buy positions when the pattern confirms.

The Importance of Discipline and Planning

One of the biggest challenges traders face is confusion. Should I buy now? Should I sell? By using the 20-40 concept, you eliminate the guesswork. You simply follow the trend — if the trend is up, you buy, and if the trend is down, you sell.

This strategy gives you a clear roadmap for your trades. You won’t be left second-guessing your decisions. And remember, it’s important to stick to your plan. If the price moves against your trade, be ready to reverse your position. This is the key to surviving in volatile markets.

Final Thoughts on 20-40 Concept

As I mentioned earlier, this is just part one of the 20-40 concept. In the next blog, I’ll be explaining how to define the action area and how to know whether the area is really powerful or not.

For now, let me leave you with one thing to remember: always trade within your area. The 20-40 area is your zone — hunt in your area and let the market guide you to success. When the market reaches these key areas, you’ll know exactly what to do.

I hope you enjoyed this blog and found it helpful. If you did, don’t forget to like and share it! And remember, the next blog will dive even deeper into this concept.

Happy trading!

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