Short Term Entry Example on the USD/CHF

I absolutely love the discussion that this series of articles has begun. Sharing ideas is less about debating what’s “right” or “wrong” but rather “here’s what works for me, take a look”. I think is point is often lost so remember, I’m not here to try to *change* anyone’s mind, just offer another perspective.

Short term trading is something that many traders are interested in but to me the main challenge to 1) discourage “overtrading” which by the way means trading without a plan for each and every entry. It’s not a matter of the number of trades, but the quality. It a trader enters the market 20, 50 or even 100 times a day that’s not necessarily “overtrading” unless each trade did not have an entry and exit plan. The other challenge with short term trading is 2) “cost per trade” and this means factoring in the spread. This is more important with short term time frames since because of the support and resistance, there is a smaller risk/reward ration…that is ofcourse if the support and resistance is being observed as a factor for entries and exits.

With that in mind, I thought that now would be a great time to show an example entry as I progress through this series of articles on how I intraday trade off short term timeframes, namely the five minute chart.

The three charts below each have a job. The top chart (whie background) is the markey cycle chart and this is the most important. It determines whether a set up will be valid in the first place. If there is not a 12 to 2 or 4 to 6 o’clock Wave angle on this chart, move on.

The middle chart (green background) is the one used for mark up or uptrend set ups and the bottom chart (red background) is used for mark down or downtrend set ups. In this example the Wave is heading at 12 to 2 so the middle chart is used for the entry and stop loss.

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Here’s a look at the pip movement during the Frankfurt/London/New York overlap which this set up is triggering within:

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This chart was created with Autochartist FXPowerStats.

Remember, you must keep an eye on the time and the economic events that occur because these will increase volatility (risk) and for some traders the heat will be uncomfortable – for others it’s welcomed. KNOW which trader YOU are.

I’ll pick up with part three tomorrow and discuss stop loss and target levels.


p.s. I posted an updated chart follow up to this set up here.