Prior Price Levels and Newly Forming Intra-Day Levels
I've established that the framework of my intra-day method is based on countertrend reversal. To reiterate, this is about waiting on the sidelines for a price trend to hit either support or resistance levels. Whatever direction it moves in doesn't matter. Either way, you have a trade. If the price travels up and breaks resistance levels, then you'll have a short position to trade. If the price travels down and breaks support levels, then you'll have a long position to trade.
If you're reading about my system for the first time, you may be feeling puzzled right now. What I'm saying is most likely exactly the opposite of what you're accustomed to. Allow me to clarify.
My system is based on a principle that flies in the face of momentum/trend trading, which is the conventional way to trade. Instead of the usual predicting or guessing as to how far Wall Street will continue a price run, I patiently wait for that price run to hit overbought or oversold price levels, and that's where I make my money.
“What price levels?” you might ask. The answers are provided in this section. I refer to them as prior levels, which means the levels we establish before the market has opened that day.
Let's recap the basic elements of intra-day trading in my system:
- I only take 15 cents on intra-day setups.
- I max my tiers to three prior price levels, meaning ...