The Rational Investor (TRI) focuses on disciplined and structured trading approaches. This step-by-step trade structure we call a "Trade Setup" should provide a greater than 66% win rate. This falls under the first rule of TRI to “follow an algorithmic trading approach”.

One of these trade setups is called the BoT, which is a continuation trade setup derived from the ABCD harmonic pattern.

In this post, we’ll look at how a BoT trade setup appeared on Ethereum chart on lower time frames (the BoT works on all time frames), and how we gauged the market sentiment using the TRI Breadth tools.

Before we show the BoT setup on Ethereum, first we’ll talk about the value of understanding how and when markets shift and change direction.

TRI’s proprietary Breadth Indicator serves as that tool to measure market sentiment and identifying contrarian signals–key factors for any trader hunting for an edge.

Here is Brian’s tweet discussing the Breadth oversold readings: https://x.com/CRInvestor/status/1821982832153203061
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​Tweet reads:
#TRiBreadthIndicator #HowToUse #trading #sentiment #contrarian Oversold/bullish signal in global stocks & crypto on BoJ brain-fart. World equities have rallied smartly off their lows & $BTC itself moved the better part of 15% from its breakout level https://therationalinvestor.com  

When the readings are oversold on both the short term and the medium term, that’s a very powerful signal. This signal is extremely valuable for traders looking to anticipate a market reversal, or confirm the strength of a trend.

Here’s how TRI applied this signal and implemented the BoT trading setup on Ethereum.

Brian shared this tweet of the BoT trade in action: https://x.com/CRInvestor/status/1821986350364782634
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​Tweet reads:
​A pretty BoT trade 'setup' too (that is still working).
TRi proprietary sentiment 'indicator' tools + taught trade setups/management protocols = institutional grade edge.
#pma4tw

As Brian stated, when you combine the sentiment indicator tools at TRI, with the trade setups and trade management protocols, you give yourself an institutional-grade edge in the market.

The recent Ethereum (ETH/USD) 30-minute chart effectively demonstrated the BoT setup in action. Full details of using the BoT trade setup are in the TRI Library, and you can see how powerful the setup is here. First the market pulled back into a retracement zone between 33% and 66% of the first A-B leg. The market then set up several lows to risk against, and your entry is at the 25% level of the second C-D leg. The BoT trade always gives a 3:1 risk reward and follows specific rules for stop management.
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​In this case, the BoT trade was a success, either hitting a trailing stop after passing the 0.66 level, or if no trailing stop was hit, the target was reached after a few days of sideways movement.

Combining the BoT trade setup with the Breadth signal indicators gives you an edge over 99% of market participants. Additionally, applying TRI’s two rules of investing minimises risk in trading and maximises profit.
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​TRI Rules:
1. Follow an algorithmic trading approach like the BoT.
2. Never risk more than 5% on any one trade
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​In Conclusion

TRI’s BoT setup taught at TRI, and Breadth indicator, only available for TRI members, provide a disciplined, structured approach to trading. By integrating these strategies into your trading plan you can achieve more consistent trading results and gain a substantial edge in the market.

If you’re looking to improve your trading, explore the full BoT setup inside the TRI Library and start following the Breadth indicators in your TRI members dashboard. To discuss this trade and anything else trading or investing-related, join the TRI community on Discord and take part in the conversation.