Shah bhai,
This is one of the tools of trading, there are similar other few techniques which are profitable setups to trade. Creating a thread or post is easy, but I want to have mine backed up with data and charts, so that there is solid evidence to back the statements.
Will reply in details to your post in details later - In general, there are many variations. The basic key is to look for HHHL/LLLH setups. This establishes the trend. In short : If trading intraday, you can look at levels, when the price is above/below the HH/LL. Let the market form a range for the first 10 minutes intraday - and track basis 1 minute chart, change to 3 minute chart after 30 minutes, to get a clearer visual clue - if the market is trending up, down or sideways, and in which direction you should trade. Also refer to have the 5 day 5 Minute, or 30 day 60 minute chart - it will show you key areas where price reversal (dips) can be bought (instead of being sold) in an uptrend and vice versa.
Many time, the market will make HHHL and top, but reverse to touch the bottom - For a intraday trader - this would have been an opportunity to buy/sell and again buy at the bottom. In an uptrend, test of low (double bottom) is a good entry point with high reward to risk - it is meant to 'shakeout' weak hands.
Do trade only when you are comfortable and convinced that this works - as with experience you will be able to add additional filters and rules to make the maximum out of this simple yet very profitable strategy.
P.S : Besides index, this strategy is profitable in commodities as it generally tends to trend in one direction.
Good luck.
This is one of the tools of trading, there are similar other few techniques which are profitable setups to trade. Creating a thread or post is easy, but I want to have mine backed up with data and charts, so that there is solid evidence to back the statements.
Will reply in details to your post in details later - In general, there are many variations. The basic key is to look for HHHL/LLLH setups. This establishes the trend. In short : If trading intraday, you can look at levels, when the price is above/below the HH/LL. Let the market form a range for the first 10 minutes intraday - and track basis 1 minute chart, change to 3 minute chart after 30 minutes, to get a clearer visual clue - if the market is trending up, down or sideways, and in which direction you should trade. Also refer to have the 5 day 5 Minute, or 30 day 60 minute chart - it will show you key areas where price reversal (dips) can be bought (instead of being sold) in an uptrend and vice versa.
Many time, the market will make HHHL and top, but reverse to touch the bottom - For a intraday trader - this would have been an opportunity to buy/sell and again buy at the bottom. In an uptrend, test of low (double bottom) is a good entry point with high reward to risk - it is meant to 'shakeout' weak hands.
Do trade only when you are comfortable and convinced that this works - as with experience you will be able to add additional filters and rules to make the maximum out of this simple yet very profitable strategy.
P.S : Besides index, this strategy is profitable in commodities as it generally tends to trend in one direction.
Good luck.
