Strike Tutorial
Harness the power of the Strike Algorithm
Last updated
Harness the power of the Strike Algorithm
Last updated
A tutorial for Lambda 2.0 will be launched in January 2023 --> this tutorial is intended for Lambda 1.0 users.
Before you begin using 'Lambda Strike' as confluence to your existing trading methodology, we strongly suggest that you read through the contents of this tutorial and ask any questions before risking your hard-earned money. Although the indicator may seem very accurate, there is no such thing as a perfect trading tool and 'Lambda Strike' should not be considered as such.
The aim of this tutorial is to guide you on how to best incorporate the signals and visuals provided by Strike into your existing trading process and to help kickstart your journey with us at Lambda Markets. If you're a video tutorial type of person then please visit the link below, otherwise continue reading on as this guide will tell you everything that you need to know about Lambda Strike!
We have developed a nice visual guide that aims to provide a quick overview of the signals that you see on the Lambda Strike chart, available via the image below. Please note that you should not formulate a trade idea based on a single component of Lambda Strike, the indicator has multiple components and should be used together to increase the chance that your trading idea is going to be successful!
Please do not stop reading at this point, we will be explaining each component in further detail throughout this tutorial!
Strike is built for HEIKIN ASHI (HA) Candles, this is contrary to what the 'masses' use in the markets. Chances are that you are used to using Traditional Candles to carry out your technical analysis and formulate trading ideas, which is perfectly fine! We suggest that you monitor both candle types to follow the signals that Strike provides, however please not that the HA signals will provide DIFFERENT signals to traditional candles and typically HA candlesticks are much more reliable!
*Please be aware that in order for an 'Execution Triangle' or 'Swing Reversal' signal to be confirmed, the candle that it is printed on, MUST first close. If you see a signal print on a candle that has not closed yet, that means that the signal is NOT confirmed and that the signal that you see may disappear and become invalidated.
You can see how the HA candles provide a much cleaner chart than what traditional candles do, this helps reduce the 'noise' of traditional charts and thus provides more reliable signals for Strike.
To change between the various candle types on Lambda Strike, you can use the 'Bars Style' dropdown box as per the below screenshot!
With Pro Access, you will receive access to a multitude of timeframes on Lambda Strike and this is very advantageous! Mainly due to the fact that most traders only look at a handful of timeframes and therefore are not seeing the 'full picture' of what is happening in the market.
With Pro Access you will gain access to all of the timeframes above and this is quite powerful in combination with the signals that Strike gives you, as you will learn it is critical to have multiple timeframes telling you the same thing in order to have conviction and higher chance of you trade idea being a successful one! To demonstrate this to you and how you can approach 'Multiple Timeframe Confluence' an example of Ted's analysis on ETH / BTC recently is available below.
WEEKLY timeframe
Strike gave a hard sell signal on the weekly chart two weeks ago signaling that perhaps it was a good time to get out of alts! The result was a massive bleed in altcoins while Bitcoin went on a stellar run higher. We must monitor this pair going forward and I will endeavor to keep this thread updated with all new developments. Currently it looks as if the weekly sell signal has played out, however flow is now in a bearish environment and we must consider that some consolidation at current levels is required to see flow inch back higher.
2 DAILY timeframe
On the 2D timeframe, there are a few things that I am noticing, it is hard to gauge directional bias from this particular timeframe but it is important to consider a few things for when we zoom into lower timeframes.
Flow is bearish and moving lower
Swing reversal signal showing early signs of a bottom
S/R levels to consider
1 DAILY timeframe On the daily timeframe we have a HARD BUY signal! This is big if it confirms (in 21hrs when Wednesday's daily candle closes) as you can see that this signal typically marks a local bottom in the market! This would then signal that alts are likely to see some temporary relief and perhaps even put in a much larger swing higher... PROMISING! The flow also looks close to exhausting and is likely to start to move back towards the zero line over the coming days - but please be aware that this signal is not yet confirmed!
12 HOUR
The twelve hour timeframe shows the flow exhaustion quite clearly, I would be surprised if flow went too much lower than where we are at now on this timeframe. The fact that the buy signal on the 12HR (confirmed) is so close to support gives me confidence that we are in fact seeing a local bottom forming. Now we just need the daily timeframe to confirm to give extra conviction that alts should see some relief in the coming days!
The most important and first point of reference on the Lambda Strike chart is the 'Flow' wave on the bottom of the chart. Think of this component of the indicator as money flow, when the wave is green and flowing higher, money is said to be flowing IN to the market - the opposite is true for money flowing OUT. It is worth noting that the 'Flow' will appear slightly differently when switching from HA to Traditional Candles and vice-versa.
When money flows into the market price should move higher based on basic economic principles and when money flows out of the market, price should move lower! You can apply this same concept to the flow on Lambda Strike.
The first step when looking at the Strike Chart is to identify the environment, are we in a bullish or bearish environment? If the flow is thick in the green we are bullish and price is likely to move higher, on the other hand, if the flow is thick and in the orange we are bearish and price is likely to move lower. It is best to avoid trading when the flow is close to the zero line and does not favor bulls or bears!
*To increase your chance of success trade when the flow is 'thick' and money is clearly flowing in one direction.
The lines at the extremes of the 'high' and 'low' of the 'Flow' represent the 'Exhaustion Area' or 'Reversal Zone'. These zones are also colored in transparent orange (Bearish Reversal Zone) and transparent green (Bullish Reversal Zone).
These reversal zones are areas at which the flow will typically reverse in the other direction and indicate that price is likely to do the same thing!
To accurately interpret the flow and therefore understand the current environment, there are a few considerations and questions that you should ask yourself.
Am I attempting to catch a top or am I attempting to follow the trend?
Am I attempting to catch a bottom or am I attempting to follow the,[ trend?
Strike is quite successful in calling market tops/bottoms, as well as, trend continuation in the market. Using the flow, you can identify whether it is appropriate to follow the current trend or whether the existing trend is coming to an end and you want to trade 'against the trend'. If you are trading with the current trend you are said to be 'following the current trend', whereas, if you are attempting trade against the trend you are said to be 'catching a top or bottom'
Answer = A combination of the 'Exhaustion Area' and the curvature of the flow wave.
A component of the Lambda Strike Indicator that anticipates the 'weakening' of the current swing is the 'Swing Reversal X' signal. The 'X' when printed on the chart, demonstrates that there is a high probability that the current swing (either up or down) is going to reverse. For example, the green 'X' below gave an indication that the down swing was going to reverse and that price was going to move higher.
Just like it anticipated the move higher, Strike's 'Swing Reversal X' component can also indicate when the current swing higher is likely coming to an end. The below chart shows how this signal can indicate that price is about to reverse and head lower.
To be clear, an orange colored 'X' indicates a bearish reversal (price is likely to move lower), whereas, a green colored 'X' indicates a bullish reversal (price is likely to move higher).
Arguably the most important component of Lambda Strike for executing a trade idea are the 'Execution Triangles'. These signals will form on the top or the bottom of a candle and indicate that there is a high probability that price moves in that direction in the candles that follow. There is no indication of how far price will move following the signal, so you should consider basic support and resistance for your take profit and stop loss placement!
The chart above shows the 'Execution Triangles' in play recently on the BTC-PERP chart (FTX Exchange data). Here you will see four (4) unique variations of the 'Execution Triangle'. These are buy and sell signals, with 'hard' and 'soft' variations. The 'hard' signal is a solid color, whereas the 'soft' signal is a transparent color, each signify slightly different scenarios.
The 'Hard' Signals indicate ultimate tops and bottoms in the market. As you can see from the above chart, Lambda Strike was able to successfully indicate the 'Macro Top' for Bitcoin in mid-2021, while later calling for a bottom multiple times around $30,000 USD. 'Hard' Execution Triangles should be viewed as very strong price reversal signals, great for catching tops and bottoms in the market!
The 'Soft' Signals offer comparatively 'weaker' signals than the 'Hard' signals. A 'Soft Execution Triangle' will often indicate trend continuation, rather than a top or bottom. When flow is in the green and price is trending higher, a 'Soft Buy' signal is a great opportunity to enter long, the opposite is true for a short opportunity. The chart below demonstrates 'Soft Execution Triangles' during BTC-PERP price action in 2021.
Lambda Strike has a number of key 'levels' shown in the form of horizontal lines that can be toggled on and off at your own discretion. Here's what each of the levels mean and how they can be used to provide additional confluence to your trading idea 👇
