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Let me ask you something…
If someone audited every trade you’ve made over the past few years, would they find a clear, repeatable pattern, or a random collection of bets?
If you audited my last five years of trades, you would find that every one was in the direction of the main trend. Every time. No exceptions.
That’s not an accident. It’s a system. Here’s how I define that trend and use it for structure.
The One Rule That Governs Everything
Whenever I trade a stock, I’m trading in the direction of the daily time frame. I start with market structure…
Is price making higher highs and higher lows, or lower highs and lower lows? Levels such as 90-day and 52-week highs reveal where the primary trend lives. Moving averages can help clarify direction while volume can confirm whether institutions are supporting a breakout or pullback.
No indicator makes the decision by itself. I want price structure, momentum and participation to point in the same direction. I’m not interested in fading a strong uptrend or shorting a powerful move higher while hoping it suddenly reverses.
This rule applies specifically to individual stocks. An index requires more flexibility because it may represent hundreds of companies moving in different directions.
Strength in a few heavily weighted stocks can mask weakness elsewhere, so I evaluate index breadth and composition rather than treating an index exactly like a single company.
Within my stock framework, there are three entries.
First, I can buy a daily-chart breakout through resistance. Second, I can enter a pullback within an established uptrend. Third, I can trade a reversal after a deeper pullback appears to have bottomed.
The timing changes, but the primary direction does not.
How the Three Setups Work in Practice
Dell Technologies (DELL) offers a practical example of the pullback approach. Instead of chasing strength, I waited for DELL to retreat within its broader trend and present a more favorable entry.
In another recent session, I took a trade after it pulled back and appeared to bottom. Those were different entries based on different setups, but both respected the daily trend.
That alignment matters because major price trends are often shaped by institutions deploying enormous amounts of capital. You can fight those flows, try to predict every turning point, or use the probabilities that large Wall Street firms have already helped establish.
I would rather put those odds on my side.
The breakout, the pullback to the trend and the reversal after a deeper pullback all serve the same purpose — entering in the primary trend’s direction. When you identify the trend first and know which setup you’re waiting for, decision-making becomes simpler.
Stop trading randomly. Define the trend, choose the setup and execute with conviction.
I hope that helps!
Roger Scott
Roger Scott Trading
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