Drilling Down’
While Bobby and I have different approaches to trading, it is interesting that we often agree on the important aspects. I suggest reading his Ibtra-0day Trading Techniques – Part 1 and then seeing how my Drilling Down is very similar in concept.
The following is from The Amazing Trader Guide
The term “drill down” means starting at longer time frame charts and then moving down to shorter time frames. The process is designed to look for confirmation of a trend or episode on multiple time frames and then find an AT ladder pattern to trade.
Drilling down time frames:
Daily => 4 hour => 1 hour => 30 minute > 15 minute => 5 minute
If you see AT ladders building in the same direction on say daily, 4 hour and 1 hour charts, you can assume there is an imbalance tilted in that direction
What the means for trading is that the institutional type traders who trade larger size and use longer term time frames will be looking to buy dips (ladder up) or sell blips (ladder down).
What this means for you is when multiple longer-term time frames confirm each other (I.e. AT ladders pointed in the same direction), you can identify the side to trade from, which is where big money traders are looking to do the same.
You then drill down time frames until you see an AT ladder pattern or a high-low reversal pattern and employ the strategy to trade.
However, you don’t trade blindly as you need to be aware of any levels, especially on longer term time frame charts, that would dampen or reverse the current episode. In this regard, go to the next lesson that describes the importance of preceding lows or highs.
Note, we will discuss AT Ladders and how to use them ti trade