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here is best guess at how to answer your question.
What I say below is used for daytrading futures and if you don’t daytrade futures, I don’t think any of this will apply.
I daytrade futures for metals, crude and natty. I trade trends where/when price movement is likely to produce profitable trades. The “where” is when price is near/close to: high/low yesterday, high/low overnight range, high/low today and a 2 hour am range just before American traders start trading. The “when” is trading around events that occur daily during the time that I trade and include: economic reports, natty/crude reports, americans starting trading for the day, europeans leaving trading for the day, and equities open. I trade the price movement around (before/after) the events, not the details of the event.
At any moment in time, price can move up, down or sideways depending on what all the current traders want price to do. So, everything that I do is based on probabilities.
My “trends” are defined by my initial stoploss “R”. A trend ends and a new trend begins when price pulls back against the current trend by more than my initial stoploss R. So daily, I analyze price action and find the trends with the highest probability of producing profits the next day. For example, I am currently trading gold trends that have a 54% probability of a profitable trade (if i do everything right) and that these 54% of trends range from 3.3R-4.4R. I can improve that probability by trading where/when as noted above, getting in early in the trend and managing the trade knowing the average trend range is somewhere between 3.3R and 4.4R. My trade management system uses my entry and the trend range to manage the trade in 4 phases: minimize losses, stay in the trade, protect profits and exit at the profit target.
I use 3 setups: pullback, narrow range and smooth price action and my entries are usually 2 bars in the direction of the trade. Most of my trades are less than 10 min, some of my trades are up to an hour and a few of my trades are longer than an hour.
