Hi Lo trading - what happened?

The secret of hi lo trading. Its actually quite simple.

Whatever time frame that you trade in, learn to start looking at the bigger picture. I was wondering, why our performance in May to July was below par. And I got one insight, which set me thinking.

In order to make Hi-Lo trading - shorting from highs and going long from the lows, I used Fibonacci levels to determine resistances and supports. I looked also at the normal pullback levels as well. But it seemed like a bit of russian roulette.

It took me some time to figure this one out, and we have not yet completely put it into action. Whenever you trade, start looking at the bigger picture of the trends for the scrip that you trade in. Its not about seeing the 15/30minute or the 4 hour charts. Its about seeing the larger trend patterns.

It is possible to cancel noise in the market by switching to higher time frames. But what about looking at the bigger picture by compressing your current time frame. This is just one good way to identify all the trends relevant for your trading. For example, if you see 5 minute bars over 15 days on one screen, you will get an immense amount of information, that can be used profitably, by using your favorite trading method. If you are a trend follower, for example, you can plot all the relevant trend lines and avoid entries of new trades in mid trend or when the market is changing direction.

Check it out, and you wont be disappointed! There is no silver bullet solution to get to the pot of gold that you dream about. But making trading simpler by looking at the bigger picture certainly helps!