I Lost Thousands Before I Found My Trading Strategy. But Once I Stuck to This Strategy, It Made Me Profitable VERY Fast. Here’s a Thread on My 3-Step Trading Strategy That ANYBODY Can Use 🧵
In this thread, I'll break down my simple but effective trading strategy into three key parts:
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1️⃣ Premarket Levels
- Charting Premarket Levels: The first step is to identify your Premarket Lows (PML) and Premarket Highs (PMH) for the stock(s) you want to trade.
- Marking Important Levels: Always have other important levels marked down before entering a trade. Trading without these key levels is like driving blindfolded—dangerous and likely to lead to losses.
2️⃣ Key Levels
- Identify Key Levels: Before trading any stock, ensure you have identified your Key Levels. A good rule of thumb is if the stock has had a significant reaction off a level more than three times on a higher time frame (TF), it's likely a key level.
- High of Day (HOD) and Low of Day (LOD): After the first 30 minutes of the trading day, mark down the HOD and LOD. Keep these levels in mind as they will guide your trading decisions throughout the day.
3️⃣ How to Trade with These Levels
There are technically four ways to play this strategy, but I’ll focus on the two with the highest win rate and best risk-to-reward ratio.
Breakout and Base/Retest Over PM High
- Identify the Breakout: If the stock rejects the PM High within the first 20 minutes, this confirms it's a key level.
- Base Formation: When the stock bases over the level (i.e., closes multiple 5-minute candles over it), it signals that buyers are protecting the level. This is a good time for a call entry, with an exit strategy at the HOD retest.
Breakdown and Retest Under PM Low
- Identify the Breakdown: If the stock flushes under the PM Low at the open and then comes back to reject the PM Low, this is a sign of support turning into resistance.
- Put Entry: This setup is perfect for a put entry with a tight stop loss just over the level. Scale out at the LOD and other key psychological levels.
🔍 Risk Management
The best part about trading with these levels is that they are VERY low risk. You’re trading with the trend and using a tight stop loss if the price moves over/under your key PM Low/High Trade Level.
🔔 Conclusion: Master these levels, stick to the strategy, and you’ll see profits much faster than most traders. Stay disciplined, and remember, consistency is key in trading!