Hi again,
The foundation of all successful businesses is great systems. The same goes for trading.
From a technical perspective, most traders don't have a system at all. No model, no specific rules, no alignment on any level. But, even if they do think they have a “system”, it has too many, unnecessary moving parts that only lead to confusion.
An efficient trading system, from a technical perspective, has the following:
- An objective way to determine bias.
- A specific time window that the model operates within.
- And a clear-cut entry checklist.
So, what is the most simple way that we can determine bias?
Identifying the higher timeframe trend and looking for a clear draw on liquidity in line with that trend. For example, if we have a bearish trend, ideally I want to wait for price to engineer relative equal lows (session lows), and then retrace.
Simple right?
After establishing a clear HTF bias, we wait for price to enter our time window and present us with our model’s entry checklist.
Clear, simple, step-by-step process of going from higher timeframe bias to lower time frame execution.
In our next discussion, I’ll go more in depth on what key levels I actually use to determine bias and ultimately execute my trades.
Talk soon,
RealTraderTim