Trading Strategy and Charting Guide

Introduction

• Daily and 4-hour levels are the primary focus for charting, as they offer more solid levels of support and resistance.
• Emphasis on keeping the trading system simple: "Simple equals more money."
• Utilizes QQQ and NQ charts only, as they move together and are critical for this strategy.

Key Rules and Strategies

1. Time Frames

   • Only daily and 4-hour timeframes are charted.
   • Avoid cluttering with smaller timeframes like 1-hour or 90 minutes.

2. Importance of QQQ and NQ Together

   • Must chart both as they respect each other's levels.
   • Levels on QQQ are respected by NQ.

3. Charting Approach

   • Daily levels are marked every day.
   • 4-hour levels are charted for high volume candles only.
   • Old levels should be removed if they have been triggered during the session.

4. Color Coding

   • Use colors to differentiate levels to reduce confusion during trading.
   • Daily levels are prioritized over 4-hour levels.
   • Example: Red for latest daily open/close, Purple for previous day extremes, Yellow for 4-hour levels.

5. Price Action Observation

   • Do not take trades directly at the levels; wait to observe price action.
   • Assess volume and reactions at key levels before entering trades.

6. Level Importance

   • Daily levels act as main indicators for market direction.
   • Daily open, close, high, and low are crucial markings.
   • 4-hour levels are used for potential turning points or targets.

7. Trading Mindset

   • Focus on fewer indicators and charts to avoid confusion.
   • Experience has shown that over-complicating leads to losses.
   • Aim to make trading decisions based on clean charts and clear signals.

Trading Execution

• Observe price action on a 1-minute to 5-minute chart during active trading.
• Look for high volume moves and reactions at marked levels to guide entry and exits.
• Use marked levels as points for potential trade targets and stop-loss placements.

Practical Application

• Conduct regular backtesting to validate the effectiveness of the strategy.
• Practice charting sessions daily to ensure familiarity with the system.
• Regularly review and adjust the strategy as necessary based on market behavior.

Conclusion

• The strategy emphasizes simplicity and the power of fewer, well-chosen indicators.
• Continual practice and adjustment based on market feedback are crucial for successful trading.
• The trading strategy is adaptable to various markets, including Forex and SPX, albeit with testing.