How I find the stock to trade
3 and more 5-min candles up
into a resistance on the higher time frames (daily)
close or around daily ATR(14) move
In the direction of the daily trend or in a range
Entry rules
I look for reversal looking pattern on 1-min chart consisting of
high volume candle leading to the HOD/LOD area. This is ideally the highest volume for the day or at least double the average volume
parabolic SAR indicator above 11EMA or extension from the 11EMA so that previous candle fits in the HOD candle space from the 11EMA
entry goes to the break of the HOD candle, stop goes 1 cent above HOD
Trade management
I entered a bit late so I had quite wide stop, so I was planning to add-up into the position. For some reason I missed the first add-up point which is the 2-min breakdown pattern.
I added-up into the position on the 2nd usual spot which is the 1st 11EMA denial and breaking the previous candle body on 1-min chart.
After the add-up I set the stop to 26.90 which is the 1st add-up point stop. It is the low volume green candle body between the high volume red candles on the 2-min chart.
Usually I target
5R
VWAP (blue line)
50% retracement of the previous move (yellow line)
whichever comes first.
I also do move stop to break-even point once I get a 1R move on the price action and once the PSAR goes below that point I trail the PSAR as a stop.
This time I decided to partial at VWAP and wait for the 50% retracement and trail PSAR with a hard stop. I always use hard stops as it takes out many emotions from my trading.
After I partialled I set the stop lower and lower with the PSAR until I had to go away from the computer for a few minutes, so I got all out automatically.
These methods allow me to maximize the profits from the move. We never know when the end will end, and we are always playing the chances game with the market. Each person’s perception of those chances are different, so you need to check on your own trades and charts what is the ideal exit or add-up strategy for your trades. I described my analytical approach in this article.