The chart below shows the critical importance of focusing on the M5 build and not the past history of our stochastics. This is Oct 28th and our trade starts at 21:20 (21:15 on the chart). This is almost 150 PIPS and if you follow the build, an easy non stressful trade. I'll admit that the entry may give you some stress but in a few short minutes you are just counting PIPS and waiting for the exit.
The dark blue area on our time frames shows when we hit the M5 Long Trigger and the period we had to wait until we saw M15 build from it. Here is our very first trading rule:
Rule 1: M5 Price MUST prove (move in the) direction of the M5 trigger signal for the trigger to be valid.
The short trigger before our long entry is not valid. Price is moving UP and therefore, only our Long trigger is still valid.
Notice we don't enter the long trade until we see M15 move up with price.. That is our second rule:
Rule 2: The M5 price must build the M15 %K stochastic move. M15 must move in the direction of our trigger after the trigger is validated.
If M15 was already moving up for the last 25 hours, that doesn't count. M15 must move after the trigger signal in the direction of our valid trigger. Always remember we are trading the present and the future..not the past.
As you can see in this trade, both these rules have been met.
Note that M30 has not moved up yet. M30 will lag and we can wait for it to go up be ultra safe, or go with the M15 so long as we meet the criteria of Rule 1 and 2. Again it is looking at the position of the stochastics that help us assess our risk. M30 is low and H4 is low. M15 is in the low mids. That's 3 out of 5 time frames showing room for upward growth. actually we really only count M15-H4 so it is 3/4. Remember that M5 is just our trigger, we do not follow the stochastic up and down to make decisions...just the trigger points on M5.
The light blue section is our trade window. Notice our EXIT. The M5 price went down, we have a M5 Short trigger and the M15 %K stochastic dropped...this is a valid short trigger. We exit. So happens our M30 validates it too, so much the better.
In the middle of the trade we have 2 price movements down with the M5 triggers...BUT the M15 does NOT move down. Flat maybe..but not down. So these are not valid short triggers.
I should note when I say "up" or "down", I am referring to the flat horizontal..so down has to be below the horizon and up above the horizon..kinda like flying
Through that entire trade and living by the 2 trade rules I mentioned (and knowing a little about stochastic positions in MTF)...the trades become very "predictable" and quite easy to enter and exit. Easy to enter and exit because the rules are exactly the same.
It is OK to cheat on the exit..take your exit on any opposite trigger if you like (so long as you are in positive PIP land and the trigger still isn't valid). Exit when you have your daily quota of PIPS. You could have made PIPS on any of the short triggers in this trade but you MUST exit when you see a valid opposite trigger.
The dark blue area on our time frames shows when we hit the M5 Long Trigger and the period we had to wait until we saw M15 build from it. Here is our very first trading rule:
Rule 1: M5 Price MUST prove (move in the) direction of the M5 trigger signal for the trigger to be valid.
The short trigger before our long entry is not valid. Price is moving UP and therefore, only our Long trigger is still valid.
Notice we don't enter the long trade until we see M15 move up with price.. That is our second rule:
Rule 2: The M5 price must build the M15 %K stochastic move. M15 must move in the direction of our trigger after the trigger is validated.
If M15 was already moving up for the last 25 hours, that doesn't count. M15 must move after the trigger signal in the direction of our valid trigger. Always remember we are trading the present and the future..not the past.
As you can see in this trade, both these rules have been met.
Note that M30 has not moved up yet. M30 will lag and we can wait for it to go up be ultra safe, or go with the M15 so long as we meet the criteria of Rule 1 and 2. Again it is looking at the position of the stochastics that help us assess our risk. M30 is low and H4 is low. M15 is in the low mids. That's 3 out of 5 time frames showing room for upward growth. actually we really only count M15-H4 so it is 3/4. Remember that M5 is just our trigger, we do not follow the stochastic up and down to make decisions...just the trigger points on M5.
The light blue section is our trade window. Notice our EXIT. The M5 price went down, we have a M5 Short trigger and the M15 %K stochastic dropped...this is a valid short trigger. We exit. So happens our M30 validates it too, so much the better.
In the middle of the trade we have 2 price movements down with the M5 triggers...BUT the M15 does NOT move down. Flat maybe..but not down. So these are not valid short triggers.
I should note when I say "up" or "down", I am referring to the flat horizontal..so down has to be below the horizon and up above the horizon..kinda like flying
Through that entire trade and living by the 2 trade rules I mentioned (and knowing a little about stochastic positions in MTF)...the trades become very "predictable" and quite easy to enter and exit. Easy to enter and exit because the rules are exactly the same.
It is OK to cheat on the exit..take your exit on any opposite trigger if you like (so long as you are in positive PIP land and the trigger still isn't valid). Exit when you have your daily quota of PIPS. You could have made PIPS on any of the short triggers in this trade but you MUST exit when you see a valid opposite trigger.
