As I mentioned in the previous post, my trading has continued to evolve and I am very much focused on making the majority of my money (and spending the majority of my time) in the first hour of trading. I have stated in past posts that based on my research and experience, setups in the first few hours offer the highest probability trades. So everything comes together nicely.
If you are familiar with the years worth of charts on this blog, everything (setups, indicators, timeframes) is still valid. But I have fine-tuned my indicators, how I plot my Fibonacci lines, and the timeframes I follow. So, some of my new strategies and thoughts might appear to contradict things from the past. But in reality, they don't. There are always valid setups no matter how you plot your Fibonacci lines, or what MAs you use, or what timeframes you follow. The key is finding what works for you. The secret to success and longevity is to pick something and stick with it, and not switch at the drop of a hat. Change is fine, especially if it is part of the evolution of your strategy. But switching from 15-minutes to 5-minutes to 30-minutes and back again, or plotting a 34EMA, then a 13EMA, then a 50SMA from day to day and week to week will only ensure that you self-destruct at a rapid pace. Consistency is key.
I made a good post emphasizing this point back in 2006 titled "Chasing Success" - read it here. I also made a follow-up post here.
Having said all of that, I will outline some of my fine-tuning over the next few posts, and I have a good chart from today's trading that will allow me to do so - GMCR. Below is a 2-minute chart of GMCR "naked" - no indicators or Fibonacci lines. Don't get caught up on the 2-minute timeframe, as these patterns will appear on any timeframe. In fact, a word of warning - trading timeframes this fast can be extremely dangerous unless you have perfected your setups and entries/exits. If you think losing money on a 15-minute timeframe is difficult to stomach, moving to a chart this fast may bring on suicidal tendencies. I made a post back in 2005 about trading fast timeframes, and although I have now migrated to a faster timeframe personally, this advice is still worth reading.
Back to the chart. This is the kind of setup you can find multiple times a week, and if you only focused on this your could probably make a living trading. But 99% of us lack the discipline to do that, so there is little danger in it becoming a reality. As you look at this chart the key question is, "how could you have anticipated the setup was going to be a runner (ie, a nice gainer) after the first five bars?" Over the next few days I will post the things I saw in the setup that pointed to a high-probability trade. But for now, try to answer the question on your own.
10/14 edit - so far, great analysis in the comments. I will post what I saw, my thoughts, and a few updated charts over the weekend.
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