When employing the IQstrat Algorithm the first step is to deploy all of the necessary indicators/items for use of the strategy onto the NinjaTrader chart:

1). From the NinjaTrader control center click the “New” tab and select “Chart”. Then select the time frame and instrument of your choosing and hit “Ok”.

2). When the chart appears on the screen “right click” the chart and select “indicators”.

3). For IQstrat you will need a 6 period displaced simple moving average channel. To build this select SMA from the indicators list, set the period to 6 and the price type to high. Then look down and under “General” change the displacement section to 4. Finally, under plots hit the plus sign and change the plotted color to blue. Hit apply.

4). Add another SMA from the indicators list and set the period to 6 and the displacement to 4 but this time set the price type to low and the color to red. Hit apply.

Now you should have a 6 period displaced simple moving average channel plotted on your chart. This channel is key for determining entry point and dynamic support and resistance.

5). Also needed are the Pivot Point indicator (which displays pivot points, support, and resistance according to calculations using the previous intervals open, high, and low) and a bar timer (which shows the amount of time left in the current bar for intra-day intervals).

6). Now you should right click on the chart, save the template, and set it as your default.

7). After you have these items in place then right click the chart and select strategies. Then select IQstrat Algorithm from the menu and apply it. You will then see the chart populated with past arrows.

8). Last, you should open up another chart identical to the chart that you are working with except this time do not add the IQstrat Algorithm. Instead, on the tool bar at the top of the chart select the hand holding money. This will bring up the chart trading option that allows you to do on chart order positioning. This step is necessary for order placement as we will discuss under the Second Rule of Entry. Note that you cannot use NinjaTrader's chart trader on a chart where a strategy is running (this is why two charts need to be open)

A). First Rule of Entry: Marked Candle Positioning Relative to Channel

When the IQstrat Algorithm identifies a high probability setup with an up green arrow or down red arrow we call the candlestick/bar that the arrow is referring to a “Marked Candle” or “Marked Bar”. To even consider the next entry step this marked bar must be in one of three positions relative to the displaced channel.

1). Majority of Marked Candle body within displaced channel.

2). Marked Candle above displaced channel for down arrow or below displaced channel for up arrow.

3). Marked Candle body starting within channel and moving outside in favorable direction.

The highest probability opportunities spring most often from the first two setups. The third setup is higher risk and should be reserved for traders with the most experience and comprehension of risk management.

Examples Below:

Note: In the chart above the first green up arrow marks a candle that is north of the high of the displaced channel. This is not a favorable position as, even though the market makes a move upward, it is far away from the displaced channel. However, the next two arrows are marking candles that are below the displaced channel and are therefore in favorable positions. Look at how the market crosses the

channel and then heads significantly higher.

Note: The first two red down arrow marked candles in the chart above are favorable (the first being above the channel and the second being within the channel) and notice how price accelerates down towards support 2 after passing through the channel. Then the third marked bar is not favorable as it is below and outside the channel to the bottom with a down arrow. In this case IQstrat has picked up on appropriate conditions but it takes a minute for buying activity to get out of the way. Of the 7 arrows on the chart, arrows 2, 6, and 7 are marking ideal bars for our trading purposes.

Note: The above chart displays a highly volatile day in the S&P emini future. The highlighted arrow is a prime example of a marked candle with a lack of candle body within the displaced channel (not an ideal marked candle). The next arrow would have been an ideal marked bar but, as you will find out in the second rule below, no order would have even been submitted in this instance.

B). Second Rule of Entry: Placement of Order and Order Type

If the Marked Candle in question is in one of the favorable positions mentioned above then you must now wait for conditions to improve further. Just because a marked bar appears doesn’t always mean that the market is going to turn that way. In fact a marked candle simply says that, according to the algorithm, there are many factors which make conditions statistically favorable for a move in the respective direction. The second rule of entry simply helps you enter a position if the market does turn in the predicted direction.

What you want to see after a favorably placed Marked Candle appears is for one of the next five candles to emerge on the favorable side of the channel (upper side of the channel for a green arrow marked candle and lower side of the channel for a red arrow marked candle). We will call this candle the Actionable Candle.

When an Actionable Candle occurs wait until the close of the bar and then place a stop order just above/below the Actionable Candle’s high/low depending on the direction of the arrow. Remember, as noted above, you cannot use the NinjaTrader Chart Trader on the same chart that you are running strategy. Therefore, you will be placing the actual orders themselves on the chart where you have chart trader running (two identical charts, one running IQstrat Algorithm and one with chart trader open).

If the arrow is red and pointing down (and the marked bar is in a favorable position relative to the channel) then you are looking for an Actionable Candle to break through the bottom of the channel and you will place a stop sell order just below the low of the Actionable Candle.

If the arrow is GREEN and pointing up (and the marked bar is in a favorable position relative to the channel) then you are looking for an Actionable Candle to break through the TOP of the channel and you will place a stop BUY order just ABOVE the HIGH of the Actionable Candle. However, READ THIRD RULE.

Examples Below:

In the example above pointer 1 (the blue arrow) points to a green arrow marking a well positioned candle. Note however, that there is no actionable candle because, although it comes close, the candlestick that pointer 2 points to does not clear the top of the displaced channel.

Turning to pointer 3 note that the marked candle is somewhat favorable and the actionable candle is the next candle. In this case a stop order would be placed at line A but would not get filled because the market turns away.

Pointer four points to a green arrow marked candle and line B denotes where a stop order would be placed in this scenario (just above the actionable candle two candles away from the marked candle).  View how the market takes off upwards as it breaks above this point.

Pointer five points to a green arrow marked candle and line C denotes where a stop order would be placed but, again, no order would have been filled in this instance because the market did not break above this point.

NOTE: A marked candle can also be an actionable candle if it has broken through the channel but exhibits all the necessary characteristics of an optimally positioned marked candle.

C). Third Rule of Entry:

If the Actionable Candle stretches significantly far away from the channel (by a half of the size of the channel or more) then either place a stop limit order back closer to the channel in hopes that price will come back and fill your order at this better price (riskier), or choose not to enter a position at this time. It’s always better to be out of a position wishing you were in than in a position wishing you were out. Once price has moved to far away from the channel then you have “missed the bus” and should wait for other opportunities.

D). Fourth Rule of Entry: When to cancel the order.

If an entry order is not filled within five bars cancel the order. If another contradicting arrow occurs cancel the order and make decisions based on the new arrow.

Risk Management

Rules for Exit

More Entry Examples: