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
I haven't tested this but 0.5% risk per trade and a stop at the previous hourly high / low, is gonna kill even with a 50% win. Besides, these breakouts get faded a lot so it will be better to trade breakout failures on 5 min charts.
ReplyDeleteThanks,
Test this for few weeks and then see.
DeleteI have been using this method for months.
Sure, it will give nice profits when the hourly 60M is trending. Thank you, I will give it a try. Regards,
DeleteAll systems will give excellent profits when a trend exists. And whipsaws in a rangebound market.
DeleteThat is why risk management is important.
The trick is in knowing when to latch on to a trend while minimising losses. Most people cannot do this because they have no clear strategy.
A system like this or using breakout levels (support/ resistance) automates the decision making process.
Sir thnx for the set up
ReplyDelete