Day Trading Blog: Trading Plan: Reversal Setups

Sunday, August 29, 2010

Trading Plan: Reversal Setups

Reversal Setups (Trendline breaks on 1 Min instead of 3 Min Charts)

are more profitable if the initial movement in the new direction is very strong

as you can see on attached screenshots, crude oil dropped much quicker after

the pullback.

Conclusion its very unusual that the dax reverses without a trendline break on the 3 min chart, if I am uncertain i might exit but not reverse a position.

Most likely those reversals happen early in the morning or after news events, often in DP Areas

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Trading Rules:

how to trade profitable? with KSE. knowledge, strategy, execution.
Knowledge: You need to buy low and sell high. So I wait for the price to first go to a prior support level on the daily, 4h, 1h chart.
Strategy: Timing is important so I trade when there is a good setup on the dax, s+p, nasdaq or oil market. My goal is to make few trades with high risk reward, that is archived by either holding a trade till the market closes or reaching a level that sets up a counter trade.
Execution: Usually there is only a 20 point risk involved, so I try to get into a prior support level on the 10 min chart and automatically set a stop and multiple take profit targets.
All the little details how to trade better are listed here but I like to keep it simple: just enter the market at prices with a target that it at least 3 times the initial risk.

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By reading this Blog, you acknowledge and accept that all trading decisions are your own sole responsibility, and I cannot be held responsible for any losses that are incurred as a result.

There is risk of loss in trading and investing. All trade decisions are your own sole responsibility.