No complex formulae or indicators are needed. Neither do you need great foresight.
You need to see what is in front of your eyes and act accordingly on that evidence – nothing else, no hope, no fear.
This is just one of about a dozen set ups I use to day trade US stocks in all sorts of market types, trending, range-bound, grinding etc.
I’ve been earning my living doing this since 1999 and the methods work consistently well, but nothing is infallible and you need the right tool for the right job at the right time.
Above all you need self-control and the humility to realise you are not the master of the markets, you are not “clever”, you are merely an individual who is going to carefully choose high probability situations to make consistent money from the markets.
I often use specific triggers to confirm the trade entries and often the exits. Those triggers are level2 buy and sell pressures and Time & Sales. These refine the trades and often keep me out of the ones which don’t work out; not always, but often enough to give me a powerful edge.
I intend to show in this thread one of the techniques which works consistently.
This thread will only include charting, not level 2 buy and sell pressures and Time & Sales.
The method I’m going to show is fairly straightforward and works well with stocks which are either strong or weak and clearly trending. It is not necessarily about trying to find the beginnings and ends of trends, although it does sometimes indicate the end of a move.
This is about taking bites out of trends repeatedly and consistently.
I’ll talk about the set up, the conditions, how to decide about position size to minimise risk, where the worst case scenario stop can be placed, and why. Personally I tend to be very risk averse and will exit a trade even though the chart doesn’t show the end of the move is likely within the time frame I’m trading. My trigger for the exit is often when I see (in a short) buy pressure building and when I see (in a long) sell pressure building on level 2 T&S.
This often is apparent before any sign on the chart, which puts me ahead of most traders.
There will be examples and then descriptions and clarification to follow.
Remember, nothing is infallible, trading is a percentage business. Some trades will fail but it is absolutely vital that losses are kept to a minimum.
I don’t look for a huge move with this technique although it happens sometimes anyway.
Price action dictates the trade. I control maximum potential loss, (slippage is relatively rare), market action controls the exit from profitable trades.
I’m very happy to take what the market offers.
There were plenty such opportunities to make money this afternoon using this straightforward technique.
In all the charts the red cross hairs were at the time of entering the trade and the image captured at the time of exit.
Three of my trades this afternoon were using this technique. All were successful.