Trader’s focus is often chasing small price movements as they happen to react to every fluctuation occurring in the marketplace. However, those that are trying to make money in the markets have a different approach than most retail developed a “Neptune” trading style. Rather than reacting to every short-term fluctuation, Neptune traders focus on identifying the larger forces driving the market. Their goal is to align with institutional momentum and stay positioned during powerful directional moves that can last for days or even weeks. Neptune traders want to find the strongest directional wave which they can ride during the evolution of that trend.
In this post, we’re going to discuss the workings of Neptune Trading in terms of how it operates, principles, technique for entry and exit points, risk management techniques, common mistakes, and integrating current trading tools into better and sound decision making capabilities by finding long-term trades before they occur.
What is Neptune Trading?
At its core, the Neptune Trading Strategy is designed to help traders participate in substantial market expansions rather than getting distracted by short-lived price swings on lower timeframes.
“Neptune” refers to the ocean; an example of a large ocean wave is developed over time and travels a long distance before it slowly loses momentum completely. The market trend strategy is based on the idea that large players create large trends in the market and retail traders can also benefit by identifying these large up or down trends and following them rather than trying to counter trade them.
Unlike scalping strategies that demand constant attention, this approach focuses on capturing larger moves over time. The goal of this approach is not to win every trade, but to capture a few large moves over time that will create a large return on your investment. The Neptune trading methodology concentrates on the following principles:
- Market Structure Analysis
- Trend Identification
- Momentum Confirmation
- Strategic Entry Points
- Controlled Risk Management
- Patience and Trade Management
Why Big Market Trends Matter More Than Small Price Movements in Trading
Many traders spend too much time trading small time frames and therefore they tend to focus on reacting to small market noise rather than major market developments. Many experienced traders discover that a significant portion of their annual returns often comes from just a handful of exceptional trades rather than hundreds of small positions. For example:
- EUR/USD has created a 1500 pip move.
- Gold had a multi-week increase.
- The NASDAQ has shown a strong upward trend.
- Bitcoin has experienced a significant breakout.
These single large trend moves will generate a larger overall profit than many trades of lower value. The Neptune trading strategy is designed to help traders recognize and trade on large trending market movements, by analyzing general market conditions before looking for potential entry points.
Neptune Trading Strategy Key Concepts Every Trader Should Know
The Neptune trading strategy is based on an approach to gathering long-term direction in trading and investing by following trends, as opposed to responding to the volatility of the market through short-term fluctuations.
Rather than trying to pick “tops” and “bottoms” in the market, Neptune traders will focus on identifying strong directional movements and staying with profitable trades for as long as they are in trends that are held intact. This helps traders reduce emotional decisions and think in a more structured, long-term way.
How to Trade With the Trend in Neptune Trading Strategy
Neptune trading is built on the premise of working with the strongest trend. There are three different states of movement in the stock market:
- Upward
- Downward
- Sideways
Accordingly, Neptune only looks for opportunities when there is an identifiable trend direction. Conversely, if you are going to trade in a downward trend, you will look for the opposite situation.
Traders who trade in the direction of the major trends have a significantly improved likelihood of making money while minimizing the risks associated with trading against the trend. Some common characteristics of an upward trend will be:
- Higher Highs
- Higher Lows
- Strong Recent Upward Momentum
- Price Above Major Moving Averages
Follow Institutional Money Flow
Banks, hedge funds, and other organisations are generally the ones driving the overall market. One of the most common mistakes among retail traders is attempting to fade strong institutional flows before any clear signs of exhaustion appear.
When large Institutions purchase unusual amounts of a security it may be possible for that trend to run for several days, weeks and even months. Neptune advises traders to always try to identify:
- Breakouts
- Accumulations
- Distributions
- High Volume Price Movement
How Market Structure Works in Neptune Trading Strategy
Market structure serves as the navigation aid for future price action. The market structure provides traders a basis to define if the trends are real or simply short-term per the overall volatility in the market. Prior to entering a trade Neptune traders will review:
- Historical Highs
- Historical Lows
- Break of Market Structure
- Trend Continuation Patterns
- Support and Resistance
How to Let Winning Trades Run in Neptune Trading Strategy
The Neptune trading system has a fundamental principle that stresses the importance of maximizing profits from successful trades. Many traders will make errors by:
- Getting rid of a portion of their profit too early
- Holding on to a trade that has lost money for too long
Over time, the result will be a more favourable risk-to-reward ratio. With Neptune, traders reverse these behaviours by:
- Accept small manageable losses
- Instead of rushing to secure small gains, Neptune traders give successful positions enough room to unfold, allowing the market to deliver its full potential.
- Using scaling out strategies as needed
How to Identify a Neptune Trading Setup
A quality Neptune set-up will typically go through a systematic approach.
Step 1: Determine the Market Direction
Use longer time frames, for example:
- Daily chart
- Weekly chart
- 4-hour chart
You want to ask yourself the following questions. The answers to these questions will help to define the directional bias.
- Is there an increase in momentum?
- Are there higher highs or lower lows?
Step 2: Find a Strong Market Wave
Recognise if there is any indication that an institutional player is involved via the following signals:
- There will be strong impulse candles
- There will be an increase in volatility
- There will be significant moves that breakout from established boundaries
- There will be expanding momentum
When several of these factors appear together, they often signal that a new directional phase may be developing.
Step 3: Wait for a Pullback
Pullbacks will usually provide lower risk entry points. Experienced traders typically do not chase prices. They will instead wait for retracements to occur into:
- Support Areas
- Resistance Areas
- Moving Averages
- Fibonacci Levels
Step 4: Confirm Momentum
Traders will typically look to confirm the momentum of an asset before entering a trade based on that asset’s momentum. The more confirmations a trader sees, the better their odds of realizing success will become. Popular methods of confirming the momentum of an asset include:
- Relative Strength Index
- Candle Patterns
- Volume Analysis
Neptune Trading Sell Signal
A Neptune sell signal usually emerges when sellers gain clear control of market structure and downside momentum begins accelerating after a period of consolidation. Thereby creating what can be referred to as an “impulsive move downward” based on a combination of varying types of consolidation over an extended period of time.
Oftentimes the first sign of this type of selling signal being present is when the price breaks below a significant area of support following a lengthy consolidation process indicating that there has been sufficient seller interest in taking control of the market.
Eventually traders begin looking for additional confirmation through other technical analysis tools such as momentum indicator divergences, bearish candle patterns, lower highs and lower lows developing consistently, etc.
Traders often look for higher quality setups before initiating short selling activity at a broken support zone that subsequently becomes a zone that would act as a level of new resistance following a series of broken support zones that acted as support.
This allows the trader to increase their potential risk to reward ratios while decreasing the probability of entering into an overbought position should the price continue downward and reach an appropriate entry point for short-selling activity.
Neptune Trading Buy Signal
A Neptune buy signal appears when price demonstrates the potential for a sustained bullish expansion rather than a temporary upward correction. A common buy signal occurs when the market has crossed above a major resistance level and has been able to establish itself above that level.
Other confirmation may come in the form of rising momentum readings; bullish continuation patterns or increased volume after the break through. A lot of Neptune traders will wait for a more controlled retracement to a support before entering into an immediate long position after a steep rise.
If there’s a level of buying support being established in the retracement area and a continuation of bullish momentum, this would provide a better entry point with defined risk parameters.
Is Neptune Trading Strategy Good for Beginners?
In terms of conceptual understanding, the Neptune trading strategy can be deemed suitable for novice traders; however, in terms of real-life implementation, it may present more difficulty than expected.
The reason is that Neptune trading simplifies trading to a single major theme of following the big players’ moves, rather than reacting to price action noise, which should be an easy concept for novice traders to understand.
However, to successfully execute such trades as outlined by the Neptune trading strategy requires a specific discipline, as well as an understanding of when or how the markets move. The easiest part of Neptune trading for novices is the use of structured decision-making processes when entering trades.
The majority of complex trading systems utilize numerous conflicting indicators that can be confusing to new traders. The Neptune trading strategy allows for focused decision making via 3 basic questions:
- Is the market moving in a clear direction on higher timeframes?
- Is there strong institutional involvement/price movement?
- Is there a controlled price retracement rather than price fragmentation when chasing price extensions?
As novice traders become more experienced, the simplicity of Neptune trading should reduce the likelihood of entering an excessive number of trades, which is often one of the largest blunders committed by novice traders.
Neptune Trading Strategy Pros and Cons Explained
As with any trading method, there are both pros and cons to using the Neptune trading system that need to be considered by any trader who wishes to add it into their trading plan.
| Pros | Cons |
|---|---|
| It places emphasis on producing quality trades as opposed to many low-probability trades. | There can be long periods of time where the trader is simply waiting for ideal setups to occur. |
| By forming a trading strategy based on waiting for only high-conviction market setups, it can help generate better trade selections. | Less exciting than scalping or short-term intraday trading. |
| Helps reduce emotional trading in a trader’s overall trading process. | Traders must have an understanding of allowing trend development time to mature. |
| It can be used to trade across a wide variety of financial instruments. | It is very versatile. |
| Focuses on trend identification and wave-based trading can be used across any and all asset classes. | – |
| It promotes and encourages a disciplined approach to trade management. | – |
| Eliminates many of those impulsive mistakes usually made by traders that ultimately lead to losing accounts. | – |
Best Indicators for the Neptune Trading Strategy
The Neptune trading strategy can be executed just using straight price action; however, it is best to utilize indicators to create better trading decisions.
Moving Averages
Moving averages assist traders in identifying the direction of a trend. In an up-trending market, the price will generally stay above these moving average indicators. Commonly used indicators include:
- 50 EMA
- 100 EMA
- 200 EMA
Relative Strength Indicator (RSI)
RSI can assist traders in making decisions regarding momentum. The RSI is a great tool for identifying pullbacks. In the Neptune trading strategy:
- If the RSI is above 50, the trend is typically moving in a positive direction (bullish).
- If the RSI is below 50, the trend is typically moving in a negative direction (bearish).
The MACD Indicator
Many Neptune traders utilize MACD crossovers as further confirmation of an up or down trending market. The MACD indicator assists traders in identifying:
- The the strength of an existing trend
- When a momentum shift may be occurring in a trend
- When a trend may potentially continue
The Average True Range (ATR) Indicator
The ATR indicator measures the volatility of an asset. The ATR will help a trader identify where to set their Stop loss and how much size of a position to take on an asset. Higher ATR values are usually present during major swings in the market.
Using Economic Events to Strengthen Neptune Trades
Major trends are created following major economic events. These types of events can range from:
- Decisions made by Central banks
- Inflation reports
- Employment Data
- GDP releases
- Interest rate announcements
If a trader fails to pay attention to these events, their trades will be vulnerable to unexpected volatility. This is why traders, as professionals, will monitor the economic calendar before they enter any trade; they can combine the potential for making money through a Neptune setup, and use the scheduled economic releases to have a greater understanding of the forces that are pulling the market.
For example, if a trader saw a bullish Neptune setup on USD pairs, and they had the benefit of strong employment data, or hawkish guidance from their Central Bank; the trader would be more inclined to take the trade.
Why Real-Time Market Analysis Is Important in Trading
One of the biggest problems faced by a trader is interpreting ever-changing market conditions. A technical setup that was valid yesterday will no longer be valid when the market receives new information today.
Access to professional insights in the market will provide greater support for a trader to make their decision. Real-time market analysis helps traders to do the following:
- Monitor changes in trends
- Track Major Support and Resistance levels, respectively.
- Understand market sentiment.
- Identify Institutional activity.
- React to Macroeconomic changes.
So by accessing professional market Insight, a trader will be able to receive a greater understanding of the dynamics of the current market, when they would have only had the history of data of the market up until that point.
Risk Management Rules for the Neptune Trading Strategy
Even the best trending systems will not be able to prevent “lost trades”. Therefore, proper risk management is very important.
Risk a Fixed Percentage Per Trade
Professional traders typically risk only a small percentage of their account equity (2%), or in some cases less than 1% to avoid being too affected by “series of outcomes”. If traders can do this they will have much less chance of having multiple losing trades causing them to lose a significant part of their account from losing a large amount of money.
Maintain a Positive Risk-to-Reward Ratio
Professional Neptune traders normally will try to have an (R/R) Ratio of 1:2, 1:3, 1:4 during their trading. Even if they are winning up to 35% of the time they can still maintain making a profit by keeping the profits higher than their losses.
Avoid Overtrading
Important trades do not happen every day. Learning when to trade will be one of the hardest lessons that typically new traders must deal with and waiting until they see the right opportunity will usually make a trader have an unfair edge on the competition.
Protect Capital During Volatile Conditions
Significant amounts of volatility can quickly stop you from being able to keep your position and having an account protection solution at times when your capital is at risk to the next market move will allow to place an additional layer of protection during the difficult times in the market.
When you trade in very volatile markets, having your capital preserved will always be a greater priority than making profits aggressively.
Neptune Trading Strategy for Forex Markets
Forex has some of the best markets for Neptune trading, where large currency trends are often driven by macro fundamental themes. Examples include:
- Interest rate cycles
- Inflation trends
- Divergence of monetary policy
- Expectations regarding the economy’s growth.
Popular currency pairs include:
- EUR / USD
- GBP / USD
- USD / JPY
- AUD / USD
These pairs tend to produce long-term directional trends that follow the Neptune principles closely.
Neptune Trading Strategy for Gold Trading
Gold is often associated with producing extremely powerful trends. Based on the Gold analysis on the Forex market, Gold has so many extended directional moves, it is an excellent market for Neptune traders to look for larger wave opportunities. The collective forces affecting Gold include:
- Expectations for inflation
- Interest rates
- Geopolitical risk ( Currency moves during geopolitical shock)
- Central bank actions
- Strength of the US Dollar
Neptune Trading Strategy for Indices
Most major stock indices emanate some of the largest trends found in financial markets. Examples include:
- NASDAQ
- Dow Jones
- DAX
Sustained momentum is often created through institutional investment flow into stocks, leading to sustained momentum over long periods. Neptune traders will track these trends and focus on pullback opportunities as opposed to trying to forecast market tops and bottoms.
Neptune Trading Strategy for Cryptocurrency Markets
Cryptocurrency prices are known for some of the highest volatility, and therefore it’s critical for trend identification. The Neptune trading method is appropriate to all financial market types. Bitcoin and all other major altcoins tend to experience:
- Rapid price increases
- Substantial price corrections
- Long-term trend cycles
How Neptune Trading Differs From Traditional Trend Trading
The Neptune Trading concept is more representative of a wave participation type in how it behaves, while traditional trend trading can be understood as providing a directional capture system only.
| Dimension | Neptune Trading | Traditional Trend Trading |
|---|---|---|
| Core Objective | The objective is to capture institutional level market waves for long periods. | The primary objective is to capture general directional movement at the market price, regardless of magnitude. |
| Trade Selection Logic | The trading logic is based on a multi-factor confirmation of structure, momentum, and macro alignment. | The trading logic is usually based on some price-based triggers like crossovers and breakouts. |
| Market Focus | The focus is on phases of high conviction expansion, created by an influx of capital into the marketplace. | The focus is on finding any sort of trend that may exist, regardless of how strong or how long the trend is. |
| Holding Behavior | The holding of positions is generally maintained through volatility for the purpose of capturing the full cycle of the wave. | The holding of positions are often exited at profit targets early in the trend or at the end of the trend. |
| Reaction to Pullbacks | Retreating from pullbacks in price has been thought of as a strategic re-entry point back into an existing wave. | Retreating from pullbacks in price has often been viewed as a potential reversal point in the current trends. |
| Decision Framework | The decision framework is based on a context-driven model (macro, structure, and momentum are in alignment). | The decision framework is based on a signal-driven or pattern-driven model. |
| Trade Frequency | The trade frequency is low; therefore, the number of trades is very selective. | The trading frequency is moderate to high; therefore, the number of trades is determined by your system. |
| Risk Philosophy | The risk philosophy involves an asymmetric risk profile that favors long duration winners. | The risk philosophy is balanced risk per trade. |
When the Neptune Strategy Fails
The Neptune trading strategy, while successful and profitable in a directionally trending environment, can experience poor returns, and in some cases, total failure, when the underlying market shifts from the assumptions upon which the strategy is built in regard to structure and momentum continuity.
In summary, Neptune trading assumes that there is ongoing institutional flow; if that continuity ceases to exist, the predictive ability of the method will be significantly diminished.
Transition or Regime-Shifting Markets
There can be significant delays in Neptune signals during long trends when there is a shift from a bullish to a bearish market. During the course of this type of transition or regime change, it can appear that the underlying market structure continues to exist when in fact the underlying liquidity, that affects your trade, has already transitioned.
High Frequency Whipsaw Environment
When there are a lot of rapid trades or reversals in price, price can often produce many false breakouts in price that may look like a Neptune trading setup, but they will fail to follow through.
Lack of Liquidity and Thin Trading Conditions
When price is moving in a thin-trading environment, relating to a holiday (or off-hours) and a very low level of participation, the alleged price movement will be artificial and disconnected from the real order flow, making the identification of Neptune-style waves difficult.
Mean-Reversion Dominated Phases
Markets can enter lengthy mean-reversion periods where the price comes back to an equilibrium instead of trending. In situations like this when using pull-back entry strategies will be more likely to create traps than provide trade opportunities.
Pre-Event Volatility Compression
Markets may exhibit reduced volatility and distorted technical structure prior to an upcoming unpredictable event. The statistical strength of Neptune setups formed during this pre-event period is weaker.
Exhaustion Phases at the End of Trends
A common point of failure with Neptune based trading occurs when Neptune signals are generated late in the life cycle of a trend. Although on a surface level, the momentum of the underlying instrument may seem strong, there may already be an institutional distribution associated with it.
Common Neptune Trading Strategy Mistakes
When you buy into an uptrend only after the market moves and drops down, you may lose money because your chances of gaining from your purchase may be less than if you purchase before the market moves and then drops down.
Finding a good place to enter the market requires patience. Traders who spend their time focusing on lower timeframe charts tend to get too caught up in their low timeframe trades and will sometimes trade against larger trends.
The first place to begin with your analysis of the charts should be on higher timeframe charts. If you adjust your stop loss due to fear or hope, you will likely develop larger losses. Neptune strategy trading’s main purpose is to capture large, considerable moves during trading.
Exiting trades earlier than you should is one of the many ways that you can undermine the Neptune trading strategy by closing positions before they can realize their maximum potential.
- Chasing the Market
- Ignoring Higher Timeframes
- Moving Stop Losses Emotionally
- Exiting Winning Trades Too Early
- Trading Against Major Economic Catalysts
Sample Neptune Trading Strategy Workflow
Having a systematic method of trading like this reduces many of the emotional decisions that cause traders to make poor performance decisions. Professional Neptune traders will use the following workflow to execute trades:
- Review the Economic Calendar.
- Analyze weekly and daily candlestick charts.
- Identify dominant market direction.
- Find strong momentum waves.
- Wait for a pullback.
- Verify that momentum is continuing.
- Enter with predetermined risk.
- Manage trades using a disciplined process.
- Let winners run.
- Exit trades based on structural changes or profit targets.
Neptune Trading Strategy Summary and Final Thoughts
The Neptune trading method does not attempt to predict every trade in the market, but rather identify “big” ocean movements, ride with institutional investors doing the same and patiently enjoy the benefits of being a part of the large ocean waves.
When many traders get distracted by every day-to-day noise, they forget they are trading in a much longer-term trend. This is why Neptune Trading encourages you to look for a broader perspective when trading by using tools such as trend analysis and identification of the structure of markets, confirming consistencies among trades on as well as off charts, disciplined risk management techniques and understanding the key economic events around which most market movements occur.
Whether you trade Forex, Gold, Indices or Cryptos, many traders focus on making as many trades as they can instead of focusing on taking part in some of the largest price movements in history, which are normally from institutions taking positions in the market.
In order to be able to trade in this way, traders have access to advanced trading infrastructure, account protection tools and up-to-date market analysis, as well as current & useful information from an economic calendar.
If you are interested in using the Neptune trading strategy on a live basis, now is the perfect time to get started by opening a trading account on STP Trading to gain access to all of the tools and resources needed to successfully navigate the financial markets with increased proficiency and confidence.
FAQ Related to Neptune Trading Strategy
Is Neptune Trading Strategy good for newbies?
Yes, it incorporates many advanced strategies, namely market structure and momentum analysis, but the strategy is simple enough for a newbie to learn and enact based on its core tenet of trading with the trend.
What timeframes is the Neptune Trading Strategy best used with?
The best timeframes to use are the 4-Hour/Daily/Weekly charts as those higher timeframes capture all of the significant trends in the market while limiting the amount of noise throughout the market.
Can I use the Neptune Trading Strategy to day trade?
Day trading is possible to accomplish using the Neptune Trading Strategy; however, this strategy is mainly a swing and position trading strategy and makes it easier to identify larger waves within the market.
What are the preferred risk-to-reward ratios of Neptune traders?
Most traders set minimal risk-to-reward ratios of 1:2, while many Neptune Traders use a minimum of 1:3 or better to create maximum returns over a long time frame.
Are there any indicators that you normally use with the Neptune Trading Strategy?
Moving Averages, RSI, MACD, and ATR are all commonly used indicators when trading using the Neptune trading strategy, and these indicators are all used to confirm the direction of the trend, the strength of momentum, and the state of volatility.
Can you use the Neptune Trading Strategy across all types of Market Conditions?
Unfortunately, no. In fact, during an extended period of consolidation, the strategy will tend to generate false signals and therefore produce losses.
How can I identify a major market wave before it becomes obvious?
Many traders identify large market movements through increased volume, strong breakout patterns, shifts in the market structure, and higher levels of institutional participation, as well as using momentum indicators or oscillators as an indication of the existence of a large market move prior to it happening.
Is the Neptune trading strategy suitable for trading Gold and Bitcoin?
Yes! Both Gold and Bitcoin tend to have substantial directional trends, which creates an ideal market environment for traders following the Neptune trend-following approach.
Is the Economic Calendar Important for Neptune Trading Setups?
Yes! Major Economic Reports can lead to large Market Waves or can cause large Market Waves to accelerate. By monitoring these reports, traders will avoid unnecessary risks as well as identify trading opportunities.
What is the biggest mistake traders make using the Neptune Trading strategy?
Most traders will take their profits too early. Since the Neptune trading strategy was created to capture larger trends, taking profits prematurely will reduce a trader’s capacity to maximize the potential of a large market wave.
