Since I have you pegged as a smart cookie, I am somewhat surprised you cannot see that an instruction can be both specific and yet arbitrary at the same. Your entry instructions are very specific and clear to understand. The arbitrariness I was referring to is in their result. I compared the usefulness of your entry rule to a coin flip. If I instructed you to flip a coin at the beginning of bar 2 and go long on head and short on tail, that would be very specific and clear to understand and just as arbitrary in terms of entering on the right side of the market.
I was expecting something along the line of, what entry rule isn't arbitrary and could I provide an example? And my answer would be, not with anything limited to the first two 5m price bars that start the day. At least, not if entering on the right side of the market is the objective.
If the objective is to just get into the market, then of course a rule such as yours is perfect. I can make up a perfect rule too with a little tweak: For a long trade, 5m bar 1 has close LOWER than open; enter if bar 2 breaks bar 1 high. For short, bar 1 has close HIGHER than open; enter if bar 2 breaks bar 1 low.
My rule is intended to catch traders on the wrong side who think the close relative to the open in the first 5 minute bar means something. Now if you just go and do your homework and choose your preferred method of trade management - placing a protective stop, setting a minimum profit target, and deciding whether or not to move your stop to breakeven at any point, oh and knowing when to reverse when you're on the wrong side, and be sure to make a trading plan first, and also get a spreadsheet and backtest, and put in 10,000 hours, and listen to people who hold themselves out as "consistently profitable traders," and read Al Brooks, and definitely read Mark Douglas's Trading in the Zone, have to read that - and soon enough you too will be laughing all the way to the bank.
Good luck!
