Trading Methodology

1) Scan Sector Charts

Use 4 hour charts by default (but also look at other time frames).

Classify each sector as either:

•   Suitable for Long Trades
•   Suitable for Short Trades
•   Not suitable for Trading

Classification is based primarily on looking at Linear Regression Line Trends for short-term (15 period) and mid-term (45 period) and long term (100 period) time frames.

Look at RSI(14) for overbought and oversold conditions to confirm the classification.

2) For each sector that is suitable for trading:

Perform Techical Analysis on the instruments in that sector looking for long or short entries depending on whether the sector is suitable for long or short trades.

For Technical Analysis to trigger a trade, we want:

• A friendly Trend
• Good Technical Indicators
• One of these to trigger an entry:
  • Price Action Setup
  • Chart Pattern Breakout
  • Candlestick Pattern

Note that technical indicators by themself can’t trigger an entry.

(See TA Daily Routine page)

3) For each Entry Signal from TA:

Set Stop Loss & Profit Target (see Risk Management page)

Set Position Size (see Risk Management page)

Enter Trade (see Trade Execution page)

This process of scanning sector charts, performing technical analysis of instruments, and entering trades is performed continuously throughout the day.