Is this a lucrative strategy?

I recently read about a setup that involves shorting after a push to make a higher intraday high fails. It's somewhat new to me since I'm relatively early in my training but I was curious how many of you guys look for these kinds of patterns. Looking at past intraday charts it looks like it can work much of the time. Thanks for the input and if you need a chart to better explain what I'm talking about I'll look for a good example.

 

I don't know about lucrative, but that is one of my set-ups that I trade, and of course it works for the intraday low as well. It rarely works on the third try though.

 

You have some pretty good thinking patterns. Go ahead post a chart.

gotta_trade


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"Happiness has little to do with the circumstances you find yourself in, but rather what your attitude is towards your circumstances."

 

Heres today's dow chart since I trade the YM. Probably not the best example but an okay representation of what I see happening a lot of the time. A recent higher high is made and the next push fails to reach that high or make a new one. I'm sure there were other factors playing into the large drop today but disregard that for the sake of it just being an example of what I'm talking about.

 

Drew,

Just by quickly checking out the chart, the first thing that comes to my mind, (in that example), is that I don't see an entry that has a good risk/reward ratio?

gotta_trade

 

i like this idea as well but you're going to have come up with more concrete rules to determine what constitutes a recent higher high and where your entry, target and stop should be. I think the idea itself is valid though.

 

so basically an attempt to catch tops and bottoms ?

 

I agree. I have no problem entering the moment it passed the previous low point of the rising trent.

 

I wouldn't put it quite like that. I don't know wether to look at it from a chart pattern perspective or if its a way to judge the price action in these scenarios. Like I said before I'm a newer trader I haven't really tested these kinds of trades in real time but I think its something worth looking into and wanted to get some feedback. And HolyGrail since you have traded these kinds of setups do you think you can post a chart thats a little clearer than mine maybe?? Thanks.

 

Anytime a trader starts a post with

"I recently read about a setup that..."

beware. You will likely not make a good living by playing with things you read in TASC, Futures, or Active Trader...