This is a simple strategy for day traders and is an adaptation of my monthly hi/lo swing strategy.
It uses no indicators - all trading is a game of probabilities; more analysis does not lead to better results.
Strategy: trade long on breakout above first hour's high with previous hour low as trailing SL.
Risk mgmt: Position sizing takes care of the risk and I recommend a risk per trade of 0.5%.
If you cannot control the risk in a trade, stay away from trading/ take up some other occupation.
Guidelines:
- use 5 min candlestick charts
- wait for completion of first hour candlestick i.e. 10 am
- mark the range formed so far (high low)
- these are your buy above / sell below levels.
- for a long trade, breakout bar close should be near the candlestick high.
- if long, SL is your previous hour's low and vice versa.
- trades to be closed by 3.30 or when your trailing stoploss is hit.
Note:
- sometimes, markets tend to trade within the first hour hi / lo range. In this case, take the first hour hi/ lo levels as breakout levels for the day.
- when a breakout happens, wait for completion of candlestick.
- above is important as a bar in progress can eventually form an hammer/ inverted hammer in which case trade should be ignored.
- this strategy can be used for cash and futures chart... just ensure liquidity is excellent.
- expect half the trades to fail (statistically).
Sample chart
It uses no indicators - all trading is a game of probabilities; more analysis does not lead to better results.
Strategy: trade long on breakout above first hour's high with previous hour low as trailing SL.
Risk mgmt: Position sizing takes care of the risk and I recommend a risk per trade of 0.5%.
If you cannot control the risk in a trade, stay away from trading/ take up some other occupation.
Guidelines:
- use 5 min candlestick charts
- wait for completion of first hour candlestick i.e. 10 am
- mark the range formed so far (high low)
- these are your buy above / sell below levels.
- for a long trade, breakout bar close should be near the candlestick high.
- if long, SL is your previous hour's low and vice versa.
- trades to be closed by 3.30 or when your trailing stoploss is hit.
Note:
- sometimes, markets tend to trade within the first hour hi / lo range. In this case, take the first hour hi/ lo levels as breakout levels for the day.
- when a breakout happens, wait for completion of candlestick.
- above is important as a bar in progress can eventually form an hammer/ inverted hammer in which case trade should be ignored.
- this strategy can be used for cash and futures chart... just ensure liquidity is excellent.
- expect half the trades to fail (statistically).
Sample chart
