Escala Strategy depicts the market direction. It is
a trend follower and, because all the well-known rules of support/resistance,
trend-lines, time frames, double or triple tops/bottoms, ascending/descending
triangles and retracements apply, the trader will quickly and easily grasp the
messages the market conveys.
Escala is a charting style, an Indicator and a trading system in itself. It embodied the thinking found in the modern-days trend following systems.
The basic concept is to buy on the completion of a
green line and to sell on the completion of a red one. Buying or selling after
the market turned is the preferred choice of trend followers who avoid trying
to pick market tops and bottoms, while going with the market flow once a new
trend is visible.
The exit signal comes in one of the following ways:
When there is a signal in the reverse direction, i.e. when a trader is long with green lines and a red line appears. This is the real exit signal.
When a profit target is being arrived at or on a trend-line violation, making it unnecessary to wait for a real exit signal to be flagged or,
When the market fails to move according to expectations.