The title says it all, do you catch the high or the low of the day?
I think it is Peter Tudor Jones, that said it in the market wizards series. When asked how it is possible that he regularly catch the markets turn points; he said something like this:
‘I catch the market turns, but I rarely catch them at my first attempt.’
And that is where money management and risk management comes in to play.
As I look for the high or the low of the day in the first two hours of trading, I have to use a tight stop and look for a reason where it can turn. The reason is usually a resistance or a support of a previous session and then a confirmation of the orderflow at that level.
The stop is very tight, and the target is at least the opening of the day. With this skewed risk/reward setup, you can try more than once. Break-even trades or small losers, when wrong, and a huge payoff when right. That is what trading is all about.