Now, many books, people, big traders, say that the market is ranging 75-85% of the time. I believe it on the small timeframes.
Now, if you take the 5 min chart and you have a strategy that goes long when price is over the 200EMA and you filter trades based on RSI, I can tell you right now that you will have a lot of bad trades, and once you have a good one, you won’t know where to stop/take profit.
The other thing that you should understand is the smaller the timeframe, the shorter the length of your trades. This means also, that if you risk 1% of your balance and you manage to get like 3 or 4 times your risk (as a gain), I think it is a good idea just to take profit. Can it go higher for more profit? Yes absolutely, but the probability is just SO low, because we are on a small timeframe.
Small timeframe = not reliable.
One solution is to add filters to your strategy. So you go long on the price above the 200EMA, you only trade when the RSI crossed over the 65 level, you add an ADX filter, so you enter when the ADX is above 20 and to really be sure you only enter when the K and D lines of MACD had a crossover. Great strategy, you definitely increased the likelihood of a move to the upside – this is a “high probability trade”.
Now look at how many signals a day you get (OPPORTUNITY Course #5) – I bet you don’t get a lot. So, if you get 1 signal a day, with not trade on the 60 min timeframe? You’d get as many signal and you would have the reliability of the higher time frame.