The list below shows how we are doing so far and a simple explanation of what we’re doing to improve things further.
Trading the lower timeframe intraday charts have been a necessary route for us. It has provided lots of chart time and many trade opportunities on an almost daily basis.
However, it is time now to increase the fund at a higher rate by taking the significant lessons learnt from day trading and move to the higher inter-day chart levels. (Rather than trades being open for a few minutes to a few hours, with the necessary stops and targets that represent that timeframe, we will be trading wider, and therefore a trade could be open from an hour up to a few days).
Most traders cannot trade lower timeframe charts successfully. Very few that I can see make it into a highly profitable enterprise. Why is this?
There are several reasons. The obvious is that with such charts a trader is more vulnerable to short term, and occasionally unexpected, news releases.
Secondly, markets spread can have an inordinate effect on a traders account when trading in the lower dimension.
Thirdly, and a reason that is not immediately obvious to most day traders is that the size of individual bars relative to spread invalidates many opportunities to use measured move targets.
As a discretionary swing trader, that final reason is more significant than I could have envisioned.
To try to illustrate the point the following is an excerpt from a trade taken yesterday and published as it occurs on Skype.
“The 4 hr and even the 1 hr allow measured move trades of a single bar.
A live example (not crucial if you like the price action or not at this stage).
Using the ruler or the fib tool, we have a potential stop and target.
However, if we copy the fib and move it up to match an improved stop position, we get our revised entry point. The stop in
I would trade the 1 hr on the same markets as the 5 min. I am expanding the possible range of markets only on the 4 hr.
There are many ways to approach the measured move; this is simply how I went about trading this one.
To complete this train of thought. On the 4 hr and often the 1 hr a measured move can be a single bar or multiple bars. It can be a measure of the wick to wick, wick to close or close to close. With enough practise the best solution becomes apparent with a reasonable degree of confidence.
Of course, a measured move relies on the set-up.”
Target reached for a 1.3R. (R means reward/risk, and in this case, the target was 1.3 times the stop position)