In daytrading the going long above or below a 3 min bars gives us low risk entries expecially on these setups:
1. Higher blue bars (that will lead to a trendline break)
Market opened at 93.76 (then price got above prior closing price at the blue line) then there is are two blue bars (the 2nd one higher than the first one)
so an entry can be made with a stop order above the 2nd blue bar (stop loss below that blue bar):
2. Before a level is broken, for example if price goes above 16119 that would mean a new swing high, so its valid to enter above the 3 min bar prior to that event, or simply a buy stop at that level (stop loss is the range of the bar prior to the break of the level so only 12 points on that day on the DOW):
3. After a level is broken in the following example a 3 min bar broke below prior support, so a valid entry was directly after the bar that made the break (with a stop loss above that bar):
4. Re-Test of the Break: At 7 am the price broke below prior support level but did not immediatly trade lower (so the entry below the 3 min bar that made the break was not filled), but a bit later there was a 2nd break and that time below the 3 min bar there was an entry:
5. Imporant level (50% pullback) after price went up and then retraced to the 50/61% level a buy above a 3 min bar is also a valid entry with first target the last high.
Important levels are also prior low:
or prior session lows (green line) even if that price levels where broken prior to the market opening minute at 9.00 am:
6. 200 ema line and VPA (volume price analysis)
on strong trends a re-entry can be made at the 200 ema line and reversals most of the time happen on strong volume changes (identified by a VPA indicator):
In order to excute a strategy based on the entries mentioned above following "Six Sigma 5S" need to be set up:
- Sort.Only essential indicators should be on the chart.
- Straighten.Charts need to be maintained, only active (with the highest volume) future symbols should be traded. It should be clear where prior session support and resistance are and those of the 24 h chart and on the daily chart.
- Scrub.Dont leave bad memories at the chart: Being stopped out yesterday at a certain price level does not quarantee being stopped out today, so after the trading session clean up your chart from drawings and empty your mind with activities that do not relate to trading (do not watch news as they influence your opinion)
- Standardize.Keep the same entry, risk management and take profit logic accross all instruments you are trading.
- Sustain.Schedule your trading day: Have a clear plan when you execute the above steps.