TRADE SCREEN & TRADE MANAGEMENT
I just had a vision but I don't know how on point I am. Many inexperienced traders tend to set up their chart screen with charts of several different markets. they follow several different markets at one time.
I have found that the best way is to pick one market that you see a setup on for the daily or weekly chart. For example if I see a pivot on the Eurodollar weekly or daily, then it is time for me to look for an entry on the intraday chart to keep my stop small and my risk reward ratio at at least 1 to 1. I prefer 3 to 1 but it depends on how strong I feel the signal is. But managing my trades this way usually get's me 3 to 1 or at the very least 2 to one. Withe this method you can be wrong half the time and still be profitable.
What I'm talking about here has nothing to do with LCM yet has everything to do with LCM. This is just basic stuff for whatever method you use. This is not about a system, this is about trading 101.
If the risk reward on the setup allows me 3 to 1 I will look to take multiple positions if the signal is strong. But in general, I want to see a pivot on the daily, 4hr, 1hr, and 30 min. at the same time.
When this occurs I can make my entry off the 30 minute pivot to get in on the move as early as possible. If I enter on a 30 minute pivot and place my stop below the 4hr swing bar then, I've got support levels for all time frames under me and have the smallest possible stop, while the stop is supported by multiple trampolines so that I have high probability of my stop not getting hit.
But it helps to see all the time frames simultaneously as opposed to going back and forth between time frames. When you go back and forth that's just so many more things you have to remember and while the game is on, the more you have to remember the more mistakes you make.
On the trade screen I have attached to this post you can see that the daily has formed a bear pivot and is at bottom daily support right now, the volume was higher today but we close with a spinning top candlestick at support. And since the daily bear pivot has not been tested, the signs tell us that the market wants to aleat test the swing bar of the pivot above. Not that it will, but a good probability and worthty of looking for a bullish intraday trading opportunity. Opportunity meaning if all intraday signals are on go.
on the 4hr I can see that we have a first up close on lower volume telling me the market is wanting to reverse up.
On the 1hr I can see a bull pivot with the market currently pulling back to test the pivot.
On the 30 minute I can see that we have a bear pivot and is the only time frame in bear pivot mode. So, if I was considering an entry right now, and I am, I would not do so until the 30 minute comes into alignment with the other time frames by forming a bull pivot.
(As I am writing this events have transpired as I just stated so I just entered long at 3535 with my stop at 3515. My target is 3591 or weakness, whichever comes first.) The reason for my entry is explained further below. I am looking to profit 56 pips while risking 20 pips. This is a 2 1/2 reward to risk ratio.
Since, the 4 hr is the strongest time frame other than the daily I will place my focus on that time frame. I don't want to focus on the daily at the moment because since it is a bear pivot I am looking to catch a bull move (pullback) to the bear pivot I look at the 4hr as the key bar for this because it is the strongest time frame below the daily.
Now I will wait until price moves above the closing price of the 4hr bar. I will not wait for the 4hr bar to close as per our pivot guidelines. If, while price is above the close of the 4hr while the 4hr is still in process, I then look at the 1hr and 30 minute. If either one of these should close with a bull pivot, I will enter long and place my stop 6 pips below the low of the 4hr bar. Remember, the 4hr bar won't be a swing bar yet because it will not have closed. It is only a potential swing bar.
But the 1hr or 30min will have closed and will have a swing bar. So, I will have support from the 1hr or 30min pivot (hopefully both) as well as the low of the 4hr bar. My target will be the low of the daily swing bar or I would get out on a 30min or 1hr pivot reversal if that happens before the target is hit. This is how you keep a profit from turning into a loss, even when your profit target is not hit.
We I say many traders have a greed vs need problem that is what I mean. They will stubbornly wait for their target to get hit even when the market has show signs that it wants to reverse on them. If you take the small profit while it is there you have a profit and you can always reenter the trade on another 30 min or even 15 min reversal back in your direction.
If you reenter you have the confidence of a winning trade and you have a profit cushion to use as your stop on the reentry. If the reentry doesn't go your way and you get stopped out, your account is not drawn down and you are still basically even for the day.
What I just talked about is TRADE MANAGEMENT. You can have the best system in the world but if you have poor trade management you will still lose money and blame it on your system instead of the real deal.
YOUR OWN GREED!!!
JERRY
I have found that the best way is to pick one market that you see a setup on for the daily or weekly chart. For example if I see a pivot on the Eurodollar weekly or daily, then it is time for me to look for an entry on the intraday chart to keep my stop small and my risk reward ratio at at least 1 to 1. I prefer 3 to 1 but it depends on how strong I feel the signal is. But managing my trades this way usually get's me 3 to 1 or at the very least 2 to one. Withe this method you can be wrong half the time and still be profitable.
What I'm talking about here has nothing to do with LCM yet has everything to do with LCM. This is just basic stuff for whatever method you use. This is not about a system, this is about trading 101.
If the risk reward on the setup allows me 3 to 1 I will look to take multiple positions if the signal is strong. But in general, I want to see a pivot on the daily, 4hr, 1hr, and 30 min. at the same time.
When this occurs I can make my entry off the 30 minute pivot to get in on the move as early as possible. If I enter on a 30 minute pivot and place my stop below the 4hr swing bar then, I've got support levels for all time frames under me and have the smallest possible stop, while the stop is supported by multiple trampolines so that I have high probability of my stop not getting hit.
But it helps to see all the time frames simultaneously as opposed to going back and forth between time frames. When you go back and forth that's just so many more things you have to remember and while the game is on, the more you have to remember the more mistakes you make.
On the trade screen I have attached to this post you can see that the daily has formed a bear pivot and is at bottom daily support right now, the volume was higher today but we close with a spinning top candlestick at support. And since the daily bear pivot has not been tested, the signs tell us that the market wants to aleat test the swing bar of the pivot above. Not that it will, but a good probability and worthty of looking for a bullish intraday trading opportunity. Opportunity meaning if all intraday signals are on go.
on the 4hr I can see that we have a first up close on lower volume telling me the market is wanting to reverse up.
On the 1hr I can see a bull pivot with the market currently pulling back to test the pivot.
On the 30 minute I can see that we have a bear pivot and is the only time frame in bear pivot mode. So, if I was considering an entry right now, and I am, I would not do so until the 30 minute comes into alignment with the other time frames by forming a bull pivot.
(As I am writing this events have transpired as I just stated so I just entered long at 3535 with my stop at 3515. My target is 3591 or weakness, whichever comes first.) The reason for my entry is explained further below. I am looking to profit 56 pips while risking 20 pips. This is a 2 1/2 reward to risk ratio.
Since, the 4 hr is the strongest time frame other than the daily I will place my focus on that time frame. I don't want to focus on the daily at the moment because since it is a bear pivot I am looking to catch a bull move (pullback) to the bear pivot I look at the 4hr as the key bar for this because it is the strongest time frame below the daily.
Now I will wait until price moves above the closing price of the 4hr bar. I will not wait for the 4hr bar to close as per our pivot guidelines. If, while price is above the close of the 4hr while the 4hr is still in process, I then look at the 1hr and 30 minute. If either one of these should close with a bull pivot, I will enter long and place my stop 6 pips below the low of the 4hr bar. Remember, the 4hr bar won't be a swing bar yet because it will not have closed. It is only a potential swing bar.
But the 1hr or 30min will have closed and will have a swing bar. So, I will have support from the 1hr or 30min pivot (hopefully both) as well as the low of the 4hr bar. My target will be the low of the daily swing bar or I would get out on a 30min or 1hr pivot reversal if that happens before the target is hit. This is how you keep a profit from turning into a loss, even when your profit target is not hit.
We I say many traders have a greed vs need problem that is what I mean. They will stubbornly wait for their target to get hit even when the market has show signs that it wants to reverse on them. If you take the small profit while it is there you have a profit and you can always reenter the trade on another 30 min or even 15 min reversal back in your direction.
If you reenter you have the confidence of a winning trade and you have a profit cushion to use as your stop on the reentry. If the reentry doesn't go your way and you get stopped out, your account is not drawn down and you are still basically even for the day.
What I just talked about is TRADE MANAGEMENT. You can have the best system in the world but if you have poor trade management you will still lose money and blame it on your system instead of the real deal.
YOUR OWN GREED!!!
JERRY
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