How I trade

Wait for the higher low

On a long day I let the 15-minute chart show me buyers before I buy. It costs a few points and gives the stop a place to go.

On a long-bias day I don't buy a falling market. I wait for the 15-minute chart to make a higher low, and I enter when price turns up from it. That costs me a few points of entry every time, and I pay it on purpose.

The alternative is buying the drop at the overnight low. The left side of the chart shows how that usually ends.

Two schematics side by side. Left, guess the bottom: a buy at the overnight low, price keeps falling, a stop placed by feel gets hit, then price turns up. Right, wait for the higher low: first low, bounce, a higher low, entry as price turns up, stop just under the higher low

Guessing gets the better price and leaves nowhere to put the stop. Waiting costs a few points and puts the stop just under the higher low.

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What a higher low is

A higher low is the market showing you that buyers have stepped in. On the 15-minute chart it happens in three moves.

Price falls and makes a low.
It bounces.
It dips again, stops above the first low, and turns back up.

That second dip is the higher low. Sellers had a chance to push price to a new low and couldn't. When price turns up from there, I enter.

For a short it's the mirror image. Price rallies to a high, pulls back, rallies again but stalls below the first high, then turns down. That's a lower high, and the stop goes just above it.

I would rather pay a few points to see the buyers than guess the bottom for free.

A few points for a stop with a home

Side-by-side comparison of buy the drop with wait for the higher low: entry price, whether the low held, where the stop goes, size of the stop, and what happens on a V-bottom

Waiting gives up a little price and the odd V-bottom. In return the stop is small and sits in an obvious place.

The cost is real. By the time a higher low forms and turns up, price is already off the bottom, and whoever bought the exact low got a better price. Some days no higher low forms at all. Price bottoms in a V and rips straight up, and I'm not in. I let it go.

What I get back matters more to me. If the higher low breaks, the idea is wrong, so the stop goes just under it. Nothing about it is placed by feel.

That stop is also small, because the higher low usually sits close to where I enter. A small stop keeps a loss small and lets me size the trade properly.

This is the third step on the sticky note in My strategy fits on a sticky note, and one of the checks my setup indicator runs (My indicator breaks even. I gave it $2,400 and 60 days to get better.).

That's the whole method. A note, two lines on the chart, and one 15-minute candle. The expensive part is the account underneath it, so the next series reads the prop firms' rulebooks one at a time.

Next: A prop account isn't one thing

New posts land on Substack first. Free, one a week. The $20k test has a scoreboard, updated every Sunday.

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Educational content, not financial advice. I trade my own accounts; nothing here is a recommendation to buy or sell anything. No affiliation with any prop firm named. Futures involve substantial risk of loss.