Entry Triggers on the Lower Time Frame

Invest Like A Pro! > Multiple Time Frames > Entry Triggers on the Lower Time Frame

Above, is a good framework of what to look for on the entry/trigger time frame (short trade). If MACD crosses down through Signal line on the break of the uptrend line (red trendline), step 1 in a change of trend; then on step 2, it should setup some version of a pinch play which is where the 1st entry arrow is pointing. 2nd entry arrow is the MACD crossing down through the Signal line. Last arrow is the break of the 40 MA line. Entry 2 and 3, at times, will happen simultaneously so it is important to understand the concepts below.

Keep in mind, we do not know 2 is 2 until it turns down. Do not pick a top. Either wait for MACD signal or go down to a lower time frame for the trigger. In addition, the target area is typically based on the swing tops and bottoms on the Trend time frame (Trade-able time frame) which is one time frame above the trigger time frame. I always prefer looking for 3:1 reward to risk or better on my trade setups. Using this approach is a good way to filter out bad entries as discussed below.

When a trigger signal develops, it is important to recognize how many bars down from the peak the stock has moved. Entry on bar 1-2 are best (YES entry example is day 2). Entries after 3-5 bars down (??? entry example) have greater risk to the stop and have greater risk of moving against you first before eventually moving in your favor. This can be very uncomfortable psychologically.

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