The read was fairly decent today. The price came in a bit shallow of the 1144.75 inside support area.
I did not get a chance to initiate a long. The action was slow and grinding. I required a deeper move down to execute.
The structure followed my visualization closely. When to price exhausted ofter the Fed announcement and came back inside 1151.00 I was looking to get short.
There were plenty of negatives about this trade. Most importantly is the ridiculous uptrend we have been seeing for the past few weeks.
The other issue was that the price was due to pull back and prone to get short squeezed exactly where I entered.
I was fully aware that I could be selling into a wall of support but had no thought of skipping the trade. I had to give it some room and got squeezed for 3 points.
I do not pass on trades just because there are negatives. There are always reasons to not take a trade.
It is interesting because I knew this trade was not likely to work, however, I did not force it.
Most of my losing trades are good setups that I just do not like very much but take anyway because I feel that I "have" to take it. The justification being that I do not want to miss out if it works and risk trading randomly.
I felt good about this one and believed in it strongly but had a feeling I could be selling into a reversal. I confidently took it with no hesitation.
It got really violent for a few seconds as many traders shorted and some big players just bought up all the shorts and squeezed them out .
I guess I could have anticipated that had I been thinking about the trap or the fact that this was a good area to fool everybody.
I am trying not to over think. I can over think well but I want simple.
I am actually pleased with the outcome. I hate to lose but I like the way I decided to hit the trade and not care much about the individual outcome.
It was discretionary and mechanical combined but not forced. Just plain different. I think that is good.
This is the end to a significant streak of small winning trades I had been having. I made an effort to not count how many winners I had in a row. It never leads to anything good to know the number.
They were all longs. This is the only short I have had in 2 weeks. It says a lot for sticking with the trend.
Hi Brian,
ReplyDeleteGood trade today, I took the same short. In my entry I use a bit more anticipation. I enter in the first pullback, when price stalls in the pullback. So I was in at 1150.50 at 14:43 EST. These days usually with a 2 point stop.
When price hit support at 1148.75 I tightened my stop to 1151, just above the pullback. Got stopped out -1/2.
What's your opinion on anticipation entries ? And also, would it have made sense for you to tighten your stop to 1151 and then if it had still moved down from there, re-enter with a 1.5 point stop on the second break down so as to not miss the trade ?
Thanks, Jos.
Hello. Thanks. Anticipation entries are good. I use them occasionally. This particular trade was a situation where the entry required more room. I could have exited with a 1.5 or 2 point loss with micro structure but I felt that I would need to take some heat if the trade did not immediately sell off. I knew I was selling into potential support and that there could be a big pullback or reversal. The other side of the coin is that if I wanted to wait for a pullback, I could miss an explosive move down. I took the risk. It was just a bet. I knew what I was selling into. My premise was that if the price pulled back, it would have presented overwhelming bullish structure anyway. The natural risk in the trade was 5 points (stop above the highs). I hardly ever risk that much. I stopped out the trade at 3 points because my premise was failing and it was apparent that it was a short squeeze. It was a good short that was very prone to getting squeezed. It was OK to take because I knew it was lower probability.
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