Adapting a strategy

FTSE Beater

Experienced member
Hi All

This is taken from a reply I gave to a private message I received earlier today, from a follow on to this thread Basic Strategy
I would like to thank the person considered for allowing me to post it openly, it is very good of you :)

IMVHO it raises the issues of switching from one time-frame to another. Some strategies work well for some time frames and not for others.

Hi ****

I currently trade around work so I am limited to a few days a month but my commitments may change preventing me from day trading the FTSE and may have to turn to more conventional trading. I had hoped I could adapt my own set-up to this time frame so that I would not have to learn new tricks, and maybe I still can. However I will need to take account of wider stops but your set-up is a start and I am looking to see if I can take anything from your set-up such as stop points. I am happier taking trades with the trend as you may have gathered from my set-up just that I trade both the short, intermediate and long term trends from an intraday perspective so there should be no reason why this cannot be applied to the longer term picture of a daily chart.

From what you've told me of your strategy it appears you have a momentum strategy i.e. Buy high, Sell Higher.
I may have got this completely wrong, but it seems to me that you've found a good strategy for short-term trading (off a 5 minute chart) and your having problems transferring it to a longer time frame.

The reason is the characteristics of the market change. On a short time frame, your getting in on the buying action looking for it to go higher and higher. What happens over longer time frames is that those people who were buying, then sell out and price starts to fall until your practically back to square 1. Well that's why longer-time frames are more rangebound, so because the dynamics change it isn't always easy to transfer them over :cry:

As your obviously an experienced trader (and the basic strategy was written as a beginners stepping stone), what you can look into is finding a setup like the one I showed on the 60 minute and use that to govern direction. Then look at the 5 minute chart to get a good entry in that direction. Once in the trade SWITCH BACK TO THE 60 min CHART!!!! It is important to do that, so you don't get too close to the action.

The other things to remember are:

  • You won't get anywhere near the profits your used to, and trades take a lot longer to complete. It's almost a trade it and leave it strategy.
  • You will need to reduce the stake size. You'll be leaving trades overnight, so you need to be trading with a stake size that doesn't keep you thinking / worrying during the day and mostly importantly, the size shouldn't keep you awake at night.
Thanks you sharing your trading set-up, and I hope the above is of some help.
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