My trading style

EDIT: Updated 11/09/2008

As of today, I'm basically trading only off the :15 timeframe. What I look for are NR bars after a pullback to the 5ema. For longs, I don't mind entering on a red candle so long as that candle has a long lower tail and not too much of an upper tail. The same logic applies for shorts... just in reverse. The pullback to the 5ema is key. Here are a few charts to sum up my trading style:

EDIT: This is pretty much outdated. I still use intraday fib. levels for entry points but my overall trading strategy right now is much different.


Rudy asked me in the comments section yesterday to detail my trading style. So, here it is:

• Intraday fibonacci levels: Fibonacci levels are great as far as showing areas of resistance or support. I typically draw my fibonacci levels from the low to high or high to low of the day and in the direction of price action. So, if price is moving up... I draw it from low to high. If price is moving down... high to low. Now, once the fib. levels are drawn I look to see how price interacts with the certain levels. For instance, if a stock gaps ups I look for price to retrace back to the 38% or 50% level (support) and show me a good entry candle ABOVE the 38% level. Here's an example:
  

To really understand this concept better, I recommend purchasing the materials from tradethemove.com... that's what I did.

• Candlestick formations: Using the above chart as an example, if I'm looking to go long, I want a strong candle to form above the 38% fib. level. In this instance, it formed a hammer which is very bullish. Basically, I look for entry bars with little to no upper tails (for longs) or lower tails (for shorts). I am also looking for regular or inside NR7 bars that form at either the 38.2% or 61.8% fib. level.
  
• 5ema: For longs, I want the candle to be very near the 5ema and close above it. Vice versa for shorts (close below it).
• Volume: On my entry bars, I look for volume to be higher than the previous candle (unless it's an inside nr7 bar). This signifies 'backing' behind the potential move. I've recently changed this requirement to be at least 1.25X more than the previous candle.
• Stock candidates: I mostly look for stocks that have gapped up or down at least 1.5% from the previous close on higher than normal volume.
  
• Timeframe: I find my strategy works well with the 5, 10 and 15-min charts.
• Share size: Risk amount divided by spread of the entry candle or stop loss point. So, if I'm risking $300 per trade and my entry candle spread from high to low is .20, my position size is: 1500 shares. Also, trade within your means when it comes to risk size... .5% of your capital is the norm, but risk whatever you feel you can afford.
  
• Stop loss: Generally, it's the opposite side of the candle that I'm entering. So, if I'm going long, my stop loss is the break of the low of my entry candle. However, I sometimes place my stop loss at a fib. level (50% for example). ALWAYS OBEY YOUR STOPS. Take a hit, tomorrow is another day. It's okay to be wrong sometimes. When you think the stock will climb back up... it won't. It's much better to lose $150 than $1500.
  

That's pretty much it. Simple... that's the way I like it. Now, I also apply these rules when price forms a nice candle at the OR high or low. Also, it's important to look at the whole chart, not just one single candle. The two biggest things I wish I implemented as a new trader 2 years ago were share size and obeying my stops. That would have eliminated 90% of my losses as a trader.