Platinum Level Trade Analysis on NZDJPY from last nights session.

Let’s talk about the pro’s, con’s, who traded it, who missed it… and the reasons why…

Many people think day trading is simply applying the swing trading strategies to the lower time frames. That assumption couldn’t be further from the truth.

Here’s the confluence we look for on the 1 HOUR CHART. Keep in mind, we factor in a unique series of confluence factors on a minimum of 2 other timeframes to justify this entry… In day trading, we DO NOT use single timeframe analysis. We use 3 time frames as a bare minimum, and 4 or 5 for some of the advanced guys, particularly when trading Hypers (IP Strategy #5).

1. We see bullish MACD forming. This is NOT a trade entry. This just alerts us to keep our eye on the charts. It could be that the daily run is in fact losing momentum.

2. A higher low forms. This, also, is not an entry signal. It re-inforces our view that the down trend could be losing steam.

3. The market breaks above the 50ema. Now we’ve got hawk eyes on the chart. Still no entry. We at least want to see a higher high form.

4. The higher high forms. We’re now looking for longs. Notice we’re not catching falling knives? We’re waiting for CONFIRMATION of trend change before jumping in.

5. The market pulls back with absolutely textbook candlestick analysis. The low test formed on the 50ema, and on a 12 year long support line. It’s entry time!

This position also met the criteria on the other timeframes, too… which ADD further confluence to the set up.

The trade is risk managed tight, and the market moves as expected. This is what an IP style day trade looks like.

Who took it?

Actually a lot of IP students, including myself, missed this entry along with the other yen runs… reason being is that the entry formed well before London morning (when the majority of these kinds of setups occur).

Those trading the pivot entry method with orders actually caught some of the moves! This includes a lot of east coast US guys who set their pivot orders before going to bed. If you cannot day trade the London open session, there are strategies you can employ to work around it. Sometimes you’ll miss some positions that the other guys don’t… Sometimes you’ll catch some positions that the other guys don’t (like these runs ^).

The mental component of this mini-lesson is as follows:

High quality, high confluence entries like this form in the market. They’ve been forming for years, and they’ll continue to form for years. Not every day, sometimes not even every week. When they do form, sometimes you’ll catch them, sometimes, you’ll miss them. It’s not the end of the world if you miss one. They’re like trains. If you miss one, wait for the next!

Don’t set up a fantasy in your mind that you’ll catch every single run, on every single pair, every single time. It just does not happen – and it doesn’t NEED to happen for you to remain a profitable trader.

If you’re an IP student, looking to learn more about this style of trading – be sure to submit a Platinum application here! 

*Platinum applications are limited only to existing Silver/Gold students.