Multi-Level Trading Observation Technique
A framework that allows you to reject against the trend
Find the right direction before getting in
➥ What is the Multi-Level Trading Observation Technique?
It is one of the core trading frameworks for professional traders, which thoroughly solves the pain points of 'seeing the right direction but not making money' and 'frequently being stopped out by false breakouts' through 'top-down' analysis of different time frame candlesticks. It is revered as the 'holy grail of trading' by countless short-term trading experts.
➥ Three Key Levels
1. Weekly + Daily: Macro direction, determining life and death, only take trend-following positions
2. 4-hour + 1-hour: Market direction, finding opportunities, locking in the current main battlefield
3. 15-minute + 5-minute: Precise entry, timing, maximizing win rate
➥ Core Usage
1. Top-down three-step approach
a. First look at the weekly and daily: Only when the big direction is clearly bullish is it allowed to look for long positions; if the big direction is bearish, only take short positions
b. Then look at the 4-hour and 1-hour: Under the premise of trend-following, look for trading opportunities that retrace to support or break through resistance levels
c. Finally, look at the 15-minute and 5-minute: Only when a reversal pattern or a golden cross appears in the smaller time frames should you really take action to enter
2. No trading if key levels are broken
a. Important support and resistance levels in the weekly and daily, once effectively broken, the trend may reverse, exit immediately
b. Previous highs and lows in the 4-hour and 1-hour are the best reference points for short-term entries and exits
3. Buy on trend-following retracements, sell on trend-following breakouts
a. When the big trend is upward, only look for long positions near support when retracing to the 4-hour and 1-hour, never chase highs
b. When the big trend is downward, only look for short positions near resistance when rebounding, never catch the bottom
➥ Four Keys to Enhance Effectiveness
a. Works best in trending markets, patiently wait for breakouts during sideways fluctuations
b. Using in conjunction with volume and MACD can improve win rate
c. The direction of the weekly and daily is the most reliable, never go against the weekly
d. Avoid mindless trading by only looking at the 5-minute and 15-minute charts, this is the fastest way to lose money
