The Strategy I Wish I Knew As a Beginner

The Strategy I Wish I Knew As a Beginner
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Today, I generated a little over $1,600 in trading. Let me break down the exact strategy I employed, explaining how I read the market, identify patterns, enter trades, and manage them.

Every trading day begins with identifying key areas of support and resistance. This involves examining a larger timeframe chart than the one I trade and looking to the left side of the chart for significant support zones. Once identified, I move to a smaller timeframe chart and patiently wait for the market to approach these levels. It’s crucial not to react to the market but to have the market align with my plan for optimal results.

I predominantly focus on reversals, examining a 15-minute chart for key levels and a one-minute chart for actual trading. I trade S&P 500 futures, which provide approximately 450 times leverage, enabling substantial movement even with a small account. Candlestick analysis is my primary tool for reading the market.

Exhaustive Moves

The first step is reaching a support level, followed by ensuring the downtrend into this level loses steam. As the market starts to go sideways, I look for signs that it may shift upward. One essential indicator is what I call “exhaustive moves.” These occur when the market attempts to push lower but gets rejected, showing indecision and potential momentum loss.

The key is identifying the moment when the market loses momentum, indicating a potential shift higher. I view my strategy as an effect – a smaller downtrend going sideways can trigger a larger shift higher. While the big picture is crucial, for a precise entry, I look for signs like a head and shoulders pattern and observe how swing lows change.

You can’t always secure the best price, and it’s essential to let things play out. In managing my trades, I adjust my stop loss based on market conditions. For instance, if the market becomes choppy, I might move my stop loss to break even to mitigate potential losses. As the trade progresses in my favor, I implement a tight trailing stop loss to secure profits. However, I remain vigilant for quick reversals, as the market tends to exhibit rapid movements.

Executing this strategy consistently requires avoiding false signals and identifying stronger trade setups. Exhaustive moves, characterized by rapid and massive bars, indicate potential reversals. Additionally, around 7:00 AM, the market occasionally reverses, so I wait for about 30 minutes before assessing potential setups.

Decision-Making Process

A checklist guides my decision-making process, focusing on key elements such as support levels, breaking the uptrend, and the formation of a head and shoulders pattern. Once these conditions align, I use a risk-reward indicator to determine the number of contracts to trade and place my stop above the recent high.

Despite the strategy’s effectiveness, waiting for trade ideas to unfold has been a challenge. I’ve learned to resist the urge to move to break even too quickly, allowing the trade the necessary time to play out. This patience becomes crucial in capturing the full potential of a trade. For instance, if the market is expected to give back a significant portion of a move, it’s essential to wait and observe rather than moving to break even prematurely.

In trading, emotional discipline is paramount, especially when managing trades fluidly. The fear of losing gains can lead to premature exits, missing out on potential profits. The strategy involves a dynamic approach to adjusting stops and recognizing when to exit a trade.

Learning and refining this strategy have elevated my trading to a new level. For a more in-depth exploration of the strategy, including additional examples and insights, check out the video linked here.

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