This is a simple trading strategy that requires judgment on the trend and whether the profit potential is worth the risk. This is best use in intraday trading.
SET UP FOR BUY (SELL IS OPPOSSITE)
1. Trade only in the direction of the trend
2. Draw a trendline connecting the last two high pivot points
BUY ON MOVEMENT ABOVE THIS LINE IF:
1. Close is above opening
2. Close is above the four prior closes
3. The price is breaking the trend channel
Stop is below most recent pivot point low. Liquidate on evidence of false move such as wide range reversal. Another possible trend reversal sign is if the price breaks the previous day’s low. Move stop initially to breakeven when the price move significantly against from the entry price. Breathing room is a question of judgment but one simple method might be to move stop just below the low of entry day if the high of entry day is exceeded by half a range.
TAKE PROFITS AT:
1. Swing objective, or
2. On a four-close trendline break that is against the trend, or
3. On a half range breakout from the opening if market enters the bell
These are suggestions. The basic idea is to liquidate the trade when it becomes apparent that
there is already a change of trend. You can add some technical indicators like moving average or RSI to generate a more precise entries and exits.
Read also about trading psychology