How to trade using Multiple Time Frame Charting

Our revolutionary software will allow you to have one chart up, a 5 min chart for example, and see the hourly bars.

TYPES OF TRADES THAT BECOME OBVIOUS USING OUR SOFTWARE

1. Buying or Selling Fibonacci retracements of large thrusting moves
2. Buying a breakout of the previous hour's high, or Selling a breakdown of the previous hour's low

Example of 5 min chart with our Pro Chart Hourly bars.  Stock ABGX (5/24/2001)

In addition to seeing the high's and lows of every hour in real time, we have also included automatic Fibonacci retracements.  These are excellent areas to buy and sell off of.  This stock is ABGX, which our Pro Scan Volume software found early in the day (around 9:35am)  BEFORE the large runup.  In case you didn't take the initial breakout trade, you should continue to watch this stock because of the large move on HEAVY volume.  Stocks that make large moves often retrace to a Fibonacci level before resuming their trend. 

Buy #1

That is exactly what happened here, the stock came down and went slightly below the 38% retracement which would be the first area you would be looking to buy.  A reasonable place to put your stop loss would be slightly beneath the 50% Fibonacci level.  If you held to the close you would have made about $2.84 (About 7% return and risking only $.50 = 5.68R Trade)

Buy #2

We have found from using our software for months and looking at thousands of stocks, that when stocks are in strong trends, it is often profitable to buy when the stock goes above the 38% off the low of the hour bar.  In this example, you would buy here with your stop just slightly under that hour's low.  You would then watch the stock and expect it to rally back to its previous high and hopefully make higher highs.  After this stock makes a higher high, it goes into an hour consolidation period and then breaks out again.  If you had bought the stock earlier, you could trail your stop just slightly under that hour's low which would have kept you into the trade for the last breakout to substantially higher highs.  If you held to the close, you would have made about $2.55 (About 6% return and risking only $.45 = 5R Trade)

Buy #3

Many breakouts fail the first time through, however it is often profitable to take breakout trades when you have a relatively small stop loss underneath a good technical support area.  In the third buy, you would take the trade as the stock trades above the previous hour's high.  This one is especially nice as the stock was in a very narrow consolidation range for an hour.  You can put your stop right under the low of the previous hour for a small and clearly defined risk.  In addition, at the time the S&P 500 futures, which many stocks follow, was at a key support area and was going up.  The more positive factors you have going into a trade the better chances it will work out for you.  If you held to the close you would have made about $1.09 (About 2.5% return and risking only $.25 = 4R Trade)

Example of 5 min chart with our Pro Chart Hourly bars.  Stock MSFT (5/29/2001)

Buy #1

One very profitable trading system involves finding stocks that make large thrusts, waiting for a pullback and then buying expecting another wave in the direction of the previous thrust.  You can see that is exactly what has happened here.  MSFT is very choppy for the first hour of the day and then makes an impressive upwards thrust.  It then retraces to the 38% Fibonacci retracement of that swing.  The beauty of using our multiple time frame Fibonacci system, is that many swings are contained inside of the hourly bars and they give you automatic Fibonacci support areas to buy and/or sell from.  In this case you would buy at this level which is ALSO the high of the first hour!  Remember, the more reasons you have for a trade, the greater chance that it will work.  MSFT makes another leg up, and makes a new high.  In another lesson, we will explain how to use our predicted high/low of the day indicator.  Because MSFT broke above our first predicted high level, we would watch and see if the second one would contain the stock's advance.  Since it blows right through the second predicted high, you would watch and see how the stock trades around the third level.  As you can see in the chart above, our third predicted high stopped the stocks advance to the penny!!  You could get out at this level or wait for a pullback and see if the stock can explode above this level on the next rally up.  If you had choose to stay in the trade, you would have found that the stock pulled back, and then rallied to a lower level (couldn't reach the old high).  You would then need to realize the chances of making a new high, above our predicted high, is very slim and then get out of the trade.  You can see from the chart above that many traders realized that the stock was unlikely to make a new high, and it fell pretty fast.  Because the stocks uptrend was broken when it came back into the previous hours range, we would stop looking for trades in this stock unless it made another large thrust.