At TRI we teach traders to find a trading style that suits them. One of these styles comes from our resident tech whizz Sjoerd (TRI CTO), who calls it “The Pancake Strategy”. If you want to know why it’s called that, show up to the Tuesday Daily Brief report where he shares the backstory. Sjoerd likes to stack several indicators, much like stacking Dutch pancakes, providing a structured way to attack the market.

Here’s Sjoerd’s video describing the process:​

The pancake trading strategy uses 3 main indicators. MACD histogram, RSI with Bollinger bands (Sjeord secret pancake sauce), and the TRI famous Willy Indicator.

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Let’s go through each one step by step:

First, you can find more in the TRI Library if you’re signed in as a member. We have multiple MACD indicators you can use. (https://app.therationalinvestor.com/library)

The MACD tracks momentum by measuring moving averages, and as momentum shifts, the MACD flips from negative to positive. When this happens, you have your first step in the pancake trading strategy.
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The secret sauce of the pancake strategy is the way Sjoerd uses Bollinger Bands on the RSI chart. RSI is a momentum oscillator that tells us when the market is shifting direction, and the Bollinger Bands is another indicator you can apply to charts or indicators that tell you when a move is about to happen.

When the Bollinger Bands squeeze and compress, telling you that volatility is decreasing, you know a move is about to happen. After this Bollinger Band squeeze, the price can break out sharply, mimicking a spring release, leading to a significant move.

The third step of the pancake trading strategy is using the Willy indicator. The Willy indicator can be found in the TRI library: (https://app.therationalinvestor.com/library)

This indicator adds another layer of precision to this strategy, helping you make better-informed trades with multiple reasons for entering. The more reasons you have for entering a trade, the better it usually is.

In the Pancake Strategy, market structure plays a major role. Look for market structure W’s or M’s (depending on the direction of the trade) which frames your entire trade. To learn more about how to find and use market structure in the market, check out this blog on the Anatomy of a W and Predicting Price Action.

Look for these patterns in the price chart and indicators, MACD, RSI, and Willy. When your indicators align with the price structure, you’re stacking the pancake odds in your favor and giving you the best opportunity for a winning trade (and tasty profits).

The best entry is when the Bollinger Bands contracts on the RSI, signaling a potential breakout coming. The RSI crosses above the lower Bollinger Band, indicating the asset is climbing from an extreme state. A positive MACD shows short-term momentum surpassing long-term momentum. The Willy indicator moves out of oversold/overbought, confirming the market is shifting direction. When these conditions align, you have a strong trade entry, and then you frame your trade around the price structure, M or W.

Enter the trade with clear risk management. Set a 2:1 risk-reward ratio at the minimum, selling half at the target and using a trailing stop loss on the rest. This secures profits while leaving room open for further gains.

The Pancake Trading Strategy follows the core principles of TRI. It combines multiple indicators and reasons to take a trade, increasing your chances of success. Like any approach, it needs patience and testing to fit your style, so we recommend applying it to your charts and paper trading to see how you enjoy using it.

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