- 1). Log onto your real-time data feed and then create a stock list of the S&P 500 next to a five-minute chart.
- 2). Create a link between your stock list and the five-minute chart. This will allow you to scroll down your stock list pulling up each stock symbol on the five-minute stock chart.
- 3). Scan the stock chart for tight price action that fluctuates within a tight base pattern. This tight base pattern should be at least 18 bars long. As you make note of any stocks that fit this pattern, mark them down with your pen on a pad for quick reference.
- 4). Enter the trade as the price action of the stock moves up or down from this pattern on higher trading volume. This move will be explosive as it breaks out from its tight price consolidation, so be ready to jump on board while setting your stop-loss point at below the base of the pattern for a long position or the top of the base pattern for a short position.
- 5). Exit half your position at two times your risk and then use a trailing stop on the remaining half using each successive higher low point as the stop-loss point.
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