How to enter low risk (hopefully) high reward short term trades

csw2002

For very short term traders, I have never found indicators such as RSI/Stochastics or even moving averages to be significantly helpful. Instead, trading support/resistence, in my experience, has been most profitable.

There are a couple of issues with trading support and resistence. Firstly, how do you know if a support/resistence is going to hold? Secondly, if it is taken out, how do enter the trade? Most importantly, how do you know where the support and resistence is?

Here are some of my tips and tricks and I hope it helps you in your trading endeavour.

(1) support/resistence
I used to use VWAP to determine support/resistence (where prices are outside 2 standard deviations from VWAP) should serve as resistence and support. This approach works well in range bound days and in trending days (though you would need to determine the direction of the breakout). However, you will need real time data services in order to compute VWAP. Since OpenTick went under, I haven't yet found a replacement that is economically priced and of industrial quality.

Without real time data services, I would use peak and troughs. I am sure all of you would have used that. I usually use 5 day 5 minute intraday chart and look at peaks and troughs.

(2) How and where to enter
As prices approach support and resistence, I usually wouldn't attempt to fade the move immediately. I would study the price actions around the support and resistence before attempting to either enter in the direction of follow-through or rejection. At the support, should the prices fall through support, I would wait for a retest before entering in the direction of the breakout (below support). Similarly, if the support holds, I'd wait for a retest of the support before fading the move. I'd place my stops immediately on the other side of the support (or resistence). That does mean you may not be able to catch all the moves. However, I find this approach far safer than attempting to place a trade immediately. It also allows you a fairly tight stop.

(3) Very short term trading tactics
With such short term trading, it is important that your broker supports trailing stops. What that means is as you position becomes profitable, the stop gets moved along with the position. While that means you may not be able to ride a long trend, it also means you'd usually get out at breakeven even if the prices move against you.

I have uploaded 3 screen shots of HSI indices and marked on the screen shots where resistence/support lies and how I traded them.

Persistance

Thank you!!!

buctusa

胡同真是高手如云，藏龙卧虎呀！

always

thanks

犮不戒

顶上去再看