1. Introduction to Price on Rails (PR)

Welcome to the Price on Rails (PR) Trading Strategy Guide, where we reveal the eight most successful trading rules based on the Price on Rails strategy—rules that achieved a remarkable 100% win rate on every trading day in 2024, and nearly 100% on individual trades throughout the year. This comprehensive manual will guide you through everything, including the exact conditions, entry points, and risk management techniques that made these trades consistently profitable. Whether you're a seasoned trader or just beginning your journey, these proven setups will help you navigate the markets with greater confidence and precision.

Price on Rails (PR) is a robust trading strategy designed for short-term operations, focusing on identifying buying and selling opportunities with a high probability of success. PR integrates technical analysis, statistical indicators, and thorough risk management with real-time projections based on Artificial Intelligence, which analyze extensive historical data and create a future path drawn on the screen. This set creates a disciplined and structured environment ("rails"), ideal for traders seeking consistency and accuracy in their results. The times described here are those of the NY stock exchanges, US Eastern Time, or EDT.

PR Objective

The main objective of Price on Rails is to maximize the number of gains and minimize losses by identifying points of confluence between different indicators. The focus is on winning more often with smaller positions instead of winning a lot of money a few times. Bring the statistics in our favor!

This means that the system looks for moments when several technical signals point in the same direction, increasing the reliability of the trading decision. With a higher probability of hitting each entry, you will have more hits in the sum of all entries and the accumulated profit will come with time and your ability to avoid the "Revenge Trading".

Understanding Why Traders Lose

Before we move on to the technical part, let's understand why most traders lose in the stock market. Being right or wrong is just one component of your outcome. Even in automated systems, you—the owner of the money—define what will be done, how big, for how long, and under what conditions.

Your Emotional State Matters

We all have bad days: getting stuck in an elevator, crashing your car, getting rained on in new clothes, or fighting with your spouse. When you're angry or upset, do not trade. When you're not doing well emotionally, step away from the market. Remember: zero is greater than -1. It's preferable to do nothing than to take a loss driven by emotional decisions.

When Markets Have Bad Days

Markets also have bad moods. Holiday eves, post-holidays, payroll days, and Fed meeting days create "atypical" market conditions. If you can identify these days, avoid trading. The market has an unparalleled ability to transfer its bad mood to you.

Avoid High-Volatility Time Periods

The Revenge Trading Spiral

"Revenge trading" happens when you lose, refuse to accept it, and increase your position size in subsequent trades. You continue to lose and increase your hand until it becomes personal, and it's common to lose everything in a single day. This pattern is completely predictable and rooted in human psychology—it will happen to you at some point. When it occurs, stop trading immediately.

There is no such thing as a "good loss," but if you must choose, the best loss is the first one. Without this explosive emotional component, Price on Rails can help you win more often and build robust financial results over time.

Key Components of PR

Support and Resistance Confluence Points

Support is a price level where demand is strong enough to prevent the price from falling further. Resistance is a level where selling pressure prevents the price from rising further.

A support/resistance level can be either a previous top or bottom as well as statistical limits calculated in several possible ways, the most common using arithmetic mean and standard deviation. The PR searches for trades when these levels coincide with similar projections calculated by artificial intelligence through the analysis of vast quantities (if not all available stock) of past data. The micro S&P 500 futures contract (MES), for example, is analyzed second by second with the ENTIRE data history for its price.

Bollinger Bands (BB)

Bollinger Bands (BB) are one of the most used technical indicators in trading to analyze market volatility and identify possible price reversal points. They are composed of three main elements:

• Simple Moving Average (SMA): We use the 20-period simple moving average, considered the standard in the financial literature, to smooth out price fluctuations and provide a central reference line.
• Upper Band: Calculated by adding two standard deviations to the moving average. This band indicates levels where the price may be overbought.
• Lower Band: Obtained by subtracting two standard deviations from the moving average. This band suggests levels where the price may be oversold.

How Prices Behave Around Bollinger Bands

The behavior of prices in relation to Bollinger Bands provides valuable trading insights. Here's what you need to understand:

• Non-Normal Distribution: Market prices rarely follow a perfect normal distribution—they tend to follow a bimodal pattern instead.
• More Extreme Moves: This means sudden price movements happen more frequently than a normal distribution would predict.
• Critical Reversal Zones: The highest probability of price reversal occurs in regions between the mean and one of the bands.

These areas represent key reversal points since approximately 95% of prices stay within the band extremes (based on the normal curve theory for two standard deviations).

Pivot Point

The Pivot Point and its associated support and resistance levels help to predict stronger trend reversals based on the opening, high, low and closing prices of the previous period. It is extremely common for prices to respect and test these points, so if one of these points is in your way, dance with it instead of fighting, as it is strong enough to spoil your intraday analysis.

2. PR Operating Rules

The PR strategy is based on a set of clear rules to define the ideal time to enter and exit a trade. The main rule is the alignment of three fundamental elements:

• Bollinger Bands (BB)
• PR Current Projected Bar
• Real-Time Price

How PR Generates Trading Signals

When all three elements align (Bollinger Bands, projected PR bar, and real-time price), Price on Rails generates a buy or sell signal against the prevailing market trend. These signals are statistically powerful countertrend opportunities.

Statistical Edge

PR signals are based on extreme statistical conditions, with a probability of success up to 99.7%—but only when the trade is closed within the price limit determined by the Take-Profit (TP) target. This exceptional confidence level corresponds to price reaching an area equivalent to the third standard deviation of the Bollinger Bands.

Managing Statistical Outliers

Despite the high hit rate, the residual 0.3% represents scenarios where markets extend beyond statistical expectations. In these cases, we recommend using position averaging (detailed in Section 5) as a risk mitigation strategy.

Special Market Conditions

When markets approach critical support/resistance zones (like pivot points or chart pattern projections), price often moves sideways. In these congestion areas, you may need to hold positions longer, seeking gradual recovery instead of taking an immediate loss.

Always base your decision to maintain positions in challenging markets on careful analysis of the current context and the strength of your risk management approach.

Practical Example: Sell Signal

The price is in an uptrend. The upper band of the BB (20, 2) coincides exactly with the projected high by the purple bar of the PR. The system identifies this confluence and changes the color of the purple bar to red, signaling a possible sale. The sell trigger is the price reaching or exceeding the level where the upper BB band and the projected high are aligned.

Trade Exit: The Take-Profit (TP) is automatically defined by the platform's target or at the next strong support, such as one of the Pivot Point levels, whichever comes first.

Practical Example: Buy Signal

The price is in a downtrend. The lower band of the BB aligns with the price of the purple bar projected by the PR. The system detects this confluence and changes the color of the purple bar to green, signaling a possible purchase. The buy trigger occurs when the price hits or falls below the level where the lower BB band and the projected low are aligned.

Trade Exit: The Take-Profit (TP) is automatically configured by the platform's target or at the next strong resistance, such as one of the Pivot Point levels, whichever comes first.

3. More Entry Rules

Technical Criteria for Opening Trades in other scenarios:

Mean-Reversion Trades:

Executed when the Bollinger Bands are narrow, indicating less volatility, one can trade against the trend using the 20-period moving average in the same way that we would use one of the bands. The platform changes the color of the projection bar from light purple to dark purple when it is aligned with the average, making viewing and decision-making easier.

Order-Book Strategy:

• Buy: JOIN the bid price, using limit orders.
• Sell: JOIN the ask price, avoiding market orders to reduce the impact of the spread.

4. Exit Rules

Take-Profit (TP) and Stop Loss (SL) Management

Take-Profit (TP):

• The TP is given by the price of the entry order or the average price of the position plus the target calculated by the platform. For example, if you have a long position of NVDA at a price of $118.20 and the target calculated by the platform is $0.10, your exit sell order should be at $118.30 (118.20 + 0.10).
• Varies in conditions of higher volatility, being directly proportional to the size of the standard deviation of the BB.
• If there is strong resistance in the way of the trade, reduce the TP to guarantee profit.

Stop Loss (SL):

• It is not fixed in points or price, but based on reading the volume and the strength of the opposite movement. If the market starts to stretch abnormally to the opposite side of your position, close it. High volume is synonymous with an unpredictable market, trade only in markets with average volume, without stress.
• Technical stop activated in cases of breaking important patterns on the chart.

Dynamic Position Management:

• Adjust targets and stops as the market evolves.
• If the price approaches the TP without the strength to continue, consider closing the position early.

5. Scale-in / Averaging-Down Strategy

Criteria for Use: Allowed to make up to 5 additional entries to adjust the average price, the first 3 with the same focus on gaining the target, and the last two more focused on breaking even the position. The new price must be at a significantly different level from the previous one, preferably in other support/resistance zones.

Exposure Management: The size of the new position must be proportional to the previous one, generally doubling the number of lots/position size. Avoid overexposure, respecting the maximum limit of contracts per trade (which you must have defined before starting to trade).

Cancellation Conditions: If the market shows a strong trend against the position, close the trade without insisting on the average price.

6. Risk Management

Proper risk management is the foundation of successful trading. Without it, even the best strategy will eventually fail. Here are the key principles to follow:

Exposure Control Rules

Position Sizing

Contract Management: Start with small lots and progressively increase in favorable trades. Always set a maximum limit of contracts to avoid excessive leverage.

Daily Loss Limits

Establish a loss ceiling for the day, avoiding the so-called "revenge trading". After reaching the limit, close the day's operations. No exceptions.

Volume-Based Risk Management

Volume Based Stop: Increasing volume against your position is a clear sign to exit the trade. High volume indicates an unpredictable market. Trade only in markets with average volume, without stress.

7. More Rules

Avoiding Common Trading Pitfalls

Repetition of Trades at the Same Level

If the same price level is tested repeatedly, the chance of a breakout increases. Avoid "insisting" on trades at the same point without confirmation of new signals. We normally do up to 3 trades at the same "entry point", after that wait for a new price level.

Scalping Strategy Focus

The goal is to capture small market movements, not prolonged trends. In case of error, exiting quickly without trying to "save" the trade with new impulsive trades is always the best scenario.

8. Operational Tips and Best Practices

Psychological Discipline

Success in trading is 80% psychological discipline and 20% technical analysis. Here are the key mental practices that separate successful traders from the rest:

• Discipline: Strictly follow the operation plan, regardless of the previous result. Stick to your rules even when emotions run high.
• Patience: Wait for the ideal setup and don't force entries in low probability situations. The best traders know that not trading is sometimes the most profitable decision.
• Emotional Control: Maintain psychological balance, especially after losses, avoiding impulsive decisions. Take breaks if you feel your emotions affecting your judgment.
• Continuous Learning: Periodically evaluate the operations carried out to identify patterns of hits and errors. Keep a trading journal to track your progress.
• Simplicity: PR works well with a simplified approach, without the need for complex graphics. Avoid analysis paralysis by focusing on the core signals.

Simulation Training

Uncontrolled in the Simulator: After a period of doing everything according to the rules, it is common for us to want to innovate and break the rules. So that the harmful effects of the unregulated operation are not lost in memory, it is recommended from time to time to do a day of uncontrolled operation in the simulator, without real money.

The lack of results and the excess of "bad" trades will remind you of the importance of continuing to follow the rules in the real world. This practice serves as a powerful reminder of why discipline is crucial to long-term success.