In\u00a0working with retail traders I get to see where people have holes in their trading plans, and where they need the most help. One of the most common areas I see a major need for improvement is in using the higher timeframe.<\/p>\n
Why do we use the higher timeframe? Let’s say, for example, we’re in intraday trader that likes to get\u00a0long consolidation breakouts. Well, I would go so far as to say that taking every consolidation breakout on the intraday chart actually has\u00a0zero edge<\/em>. That’s right. Where I think this trader will find a positive expectancy is from an acute awareness of the higher timeframe to help filter when to take the pattern entry (in this case a consolidation breakout), and when to pass on the trade<\/strong>.<\/p>\n That’s right… not all consolidation breakouts are created equal!<\/span><\/p>\n In my opinion, an intraday pattern is a tool to help you clearly define risk and provide a “trigger” to get you into a trade – both are good things to have in a trade plan. The\u00a0real edge comes from identifying what the risk:reward landscape looks like on the higher timeframe, and\u00a0then\u00a0using that context to your advantage.<\/p>\n Two very common examples of entries without a proper context:<\/p>\n