Another five minute daytrade set up example…

I show these NOT for trade set ups…this is to train your eyes to begin seeing how these set ups look and also a couple entry options to consider.

Start with the basic set up:  a 12 to 2 to 4 to 6 o’clock Wave angle.  In fact the easiest way to look for this set up is to scan the five minute charts for a valid trend.  Five minute charts change their mood quickly so this is a much more “hands on” approach than even a 30 or 60 minute chart.  Also, this is a great way to trade if you only have 30 or 60 minutes to trade and you want to keep you risk low, activity higher, and be flat when you walk away…

Here’s the cable confirming the trend on the five minute chart:

Here’s the correction into the 13ema close.  The initial opportunity to short is at the lower green line which is usually the 13ema and extends up to the 21ema close.  So you can either look at the set ups conservatively and enter in between the two lines OR enter an on the first green line and then again at the second higher green line.

The risk management starts with the lower red line as a “warning track” and the higher red line as the stop loss.  For the exit remember, you can add the spread to the higher red line just as I would with the top line of the Wave in a swing short…make sense?

By the way, I was online with my best friend’s husband, Mark, yesterday evening and we were talking about typical challenges with Wave readings when setting this five minute “daytrade” up.  I always get a better idea of how to teach these set ups when I am actually speaking to someone about them so I can see it through their eyes.  Mark’s a sharp guy and in just a few weeks has picked up a lot about forex trading…I wanted to make sure that when he makes to leap to minis or micros that he has a low risk entry style he can use and a style that gets him “pushing buttons” to get comfortable getting in and out of the market.   I think I have always underestimated how important that was for me in the 90’s.  Active trading is not “bad” unless it’s done without a plan!

So as he and I were scanning the charts together:

EUR/USD

USD/JPY

GBP/USD

USD/CHF

AUD/USD

NZD/USD

USD/CAD

EUR/JPU

GBP/JPY*

(* pretty much the ONLY way I trade the “twisted sister” is with this five minute set up!)

The USD/JPY was the only one that was trending enough to set the trade up.  Here’s a look at it…and this set up was at triggering in the early Asian session.

This was not a “great” set up not because of the Wave angle — as there is NO arguing with the Wave angle in these set ups — but rather the quadruple bottom that prices had been bouncing along.  But remember, ONE obstacle at a time… obviously that support is an initial downside target.  So Mark and I talked through the pros and cons of the trade, the expectations during this time of day as the Asian session was gearing up, and economic events.  There was a 6:50pm EST “Core Machinery Order” number that was an “medium heat” hot zone.

Here’s what happened: