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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (69188)	12/23/2025 8:15:21 PM
From: Johnny Canuck	Respond to of 69211

I heard a variation of the rules of 3 recently for a support level break: 3 percent or 3 periods (candles) to confirm a signal. I might try it to see if it prevent being whipsawed out less often. I usual use the 3 day rule for swing trades. >>>>>>> The "rule of threes" (or "rule of three") in stock trading isn't a single, universally standardized concept but appears in several contexts as informal guidelines or observed patterns among experienced traders. Here are the most common interpretations based on trading discussions and strategies: The Three-Day Rule (most common usage): This is a popular heuristic advising traders to wait at least three trading days before buying a stock that has experienced a sharp decline (e.g., due to bad earnings, news, or a sell-off). The rationale is that institutional investors and large funds often can't unload massive positions in one or two days without further driving down the price, and margin calls or panic selling may continue initially. Waiting allows the dust to settle, reducing the risk of catching a falling knife or buying into a temporary dead-cat bounce. It's often credited to veteran floor traders and mentors in options and stock trading. Three-Day Price Movement Pattern: An observational "rule" noting that strong trends, rallies, or sell-offs often play out intensely over three days before weakening, reversing, or consolidating. Day 1 sets the momentum, Day 2 continues it, and by Day 3, exhaustion or reversal signals may appear. Traders use this for timing entries/exits in swing or day trading. Rule of Three in Multi-Timeframe Analysis: Traders align signals across three timeframes (e.g., daily for trend, 4-hour for context, and 1-hour/5-minute for entry) to confirm trades and filter out noise. This "triangulation" improves confidence in setups for day trading, swing trading, or forex/stock strategies. Other loosely related "three"-based ideas include risk management variants (e.g., part of the 3-5-7 rule) or profit-taking in thirds, but these are less directly called the "rule of threes." It's generally a rule of thumb rooted in market psychology and historical patterns rather than a formal regulation (like the old T+3 settlement cycle, which is separate). Many traders adapt it flexibly for discipline and risk control.