Method
Set up high, enter low
Find the idea on a large timeframe and use a smaller one to time the entry.
Arithmetic
True by construction. No market data is needed to know it.
The position size arithmetic is exact. Whether the closer stop hurts the win rate is untested here and is something the trader's own history can show.
What it is
A setup on the daily chart can be entered from the one-hour or fifteen-minute chart, where a stop can be much closer.
What it suggests
A closer stop allows a bigger position for the same dollars at risk, and it also gets hit more easily by ordinary noise. Both sides of the trade-off are real.
How to check it
Compare the stop distance on both timeframes and how often ordinary swings on the lower one would have reached it.
Common mistakes
- Counting the tighter stop as free.
Related lessons
Written in our own words. Education only, not financial advice.