Top Down Approach
A Top-Down approach is basically doing your analysis on a higher timeframe to get in line with where you or your strategy is showing price is likely moving to, then on a lower timeframe to wait for your trade setup to form, and then either entering on that timeframe or going to an even lower timeframe for an entry signal.
As per our usual JG-Sniper's approach, we use the Hourly(H1) timeframe for higher timeframe analysis. We either enter at the H1 Fibonacci retracement levels or move to a lower timeframe(LTF) to identify entry opportunities.
In our first video, we observe that price gap up from opening and doing a retracement, At this point, we should apply our Fibonacci retracement tool and wait for the price to retrace to a level that we can enter a long position.
In the second video, price has retrace to the Fibonacci buy cluster. For traders who plan to enter using H1 chart, your order is filled.
In the third video, price has reached it's first target profit exit on both H1 & LTF.
At the time of writing this, the outcome of our balance position is still unknown. However, since we have reached our first target exit with the majority of our trading position, I want to take this opportunity to re-emphasize the importance of risk/reward money management in trading.
For the risk/reward ratio to be meaningful, you must adhere to your trading plan. If you don't fully commit to exiting a trade at your stop loss price, your potential risk becomes unlimited. The amount of money you risk is determined by the size of your position, so choose a position size that you are comfortable with within the context of your risk/reward ratio.
Comments