Three-Step
Day
Trading
Tips
The
three-step day trading method combines
the daily, hourly and the three-minute charts. Instead of breaching
the top-down
day
trading
principle, one is using three times
frame. Each time frame has its own purposes.
First Step Day Trading Tips
One
will search
and identify bullish and bearish high probability day
trade
set-ups on the daily chart. Advanced technical traders will validate
those day
trading
set-ups on the weekly chart or higher. One will thoroughly analyse
each price structure before going to step two. The step one is more
important than the second step. Once, one confirms a daily chart high
probability day
trading set-up,
one will implement the second step.
One
should always have two watch
lists.
One
bullish and the other bearish.
Day
traders
must always be ready to sell or buy.
To
speed up the search of those high probability day
trading
opportunities, one can use stock screening software with a
valid
search
criteria. Once the software fetches the search
result out,
one must manually filter out useless ones, and keep the best day
trade set-ups.
It
is essential that one does not rush or skip steps.
Second Step Day Trading Tips
This
time, one will switch to the hourly chart, and patiently wait for a
clear-cut
direct
day
trading
signal. One will make sure that a bullish day
trading
signal is near a support level, and bearish direct trading signals in
the vicinity of a resistance. Note that only the price gives
direct trading signals.
To
master this day trading method, it is essential to understand that
the hourly chart is the medium term trend of the daily chart (daily
chart is the long
term trend
for
day trading purposes). The next thing one should also grasp is that
the day
trading
set-up
either technical or fundamental generates the trading signal.
Therefore a useless day
trading
set-up
is more likely to produce unreliable day
trading
signals. Nevertheless, if the
signal fails after one has placed the
trade, one will close the trade as
soon as possible.
Third Step Day Trading Tips
The
third step consists of switching to the three-minute chart where a
day trader
will select a low risk entry point.
Note
that the trade entry is a secondary confirmation of the signal on the
short term time frame (3M). At this stage, one will re-examine the
overall risk, and only take day
trades
that comply with one own risk tolerance. For example, if both the
day
trading
set-up
and signal are adequate,
but the risk is too high, one can stay out. One is not obliged to
take risky day
trades.
The
last
thing
a
day trader
ought to do is to manage the day
trade
after the entry.
Three-Step
Day Trading Test
What
is day trading?
What
is a specialist day trader?
What
is a top-down day
trading?
Why
is it essential?
What
is a fractal day
trading
signal?
What
is a direct day
trading
signal?
what
is an indirect day
trading
signal?
Why
do some technical
traders
prefer the 20 hours
daily
chart?
Why
others prefer two-day chart instead
of daily chart?
At
what
time do the pros generally start day trading?
Why
is it essential to wait until the first thirty-minute candle bar
is
formed before one
starts day
trading?
What
is a day
trade
set-up
validation?
How
would you validate a two-hour chart day
trade
set-up?
How
would you validate a daily chart trade set-up?
Why
some traders prefer the three minute chart to 5-minute
chart.