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Well, not much doubt we're going down. The only question is how to play it: information risk or price risk?
Price has successfully completed the test of the move down on Thursday. Now it is time to test the move up on Friday and perhaps further down from earlier in the week. Getting on board the trend within a reasonable amount of risk will be the challenge.
For my first trade I chose price risk and entered on confirmation of the resumption. Probably should have held this one but chose to take a quick winner to start the week.
OR established. There is definite liquidity on the bid today. Who knows how low they want to take it. Price is at some support now but it probably wont hold for long. Missed some opps while doing the morning blueprint. That is one of the drawbacks of doing this on the forum. And yes, I should have held that first trade!
Traded more today. A little looser with the entries. I will try to keep this mindset through the week. It didn’t work out today though. Had one great trade with many ok trades. One really bad trade at the end of the day. Shouldn’t have taken it. I was desperate to get into the black. Stupid.
After testing all areas above overnight, it was highly probably this would be a down trend day to test areas below. Hindsight shows that if I hold the first trade all day I make 100+ ticks. But that’s hindsight. The good news is that 6 of the 7 trades were with trend. That’s a plus, but I still didn't come out ahead. I think I was leaning towards price risk too much today.
3 right trades, 4 wrong trades. Though I was mostly trading with the trend, my timing was off several times. Entered too late. Need to get more comfortable with information risk and enter higher in the pull back.
There are a lot of un-tested breakdown levels from yesterday's sell-off all the way up to the 45.50 area. We are coming off a major swing low, so the market may want to go back up and get some of those levels.
If we hold below the 43.00 area, we could see testing all the way down to the 42.10 area.
Currently we are between support and resistance so trading needs to proceed with caution until we get out of here. One possibility is to fade the S/R but that is a little more sophisticated for me. I will look for order flow events to confirm either an obvious fade opp or a breakout should one occur.
Apparently I decided to trade today. After the first two trades I was down 8 ticks, then got up 41 ticks. I figured I would press for a big day and ended up giving it all back and then some. The market just wasn’t there for a big day.
What struck me about the day was how calm I was, even while giving it all back. Somewhere deep down I felt that everything in the long run is going to be ok. I’m catching more winners, I’m developing some nice set ups. It just wasn’t the day to press. If I can keep the same attitude during the really good days I should be ok. We’ll see.
As far as the trading was concerned there was good, ok, and bad. The market showed a lot of impulse moves that stalled out quickly, so in hindsight it looks like I took a lot of trades at the edges. Price risk in markets like this doesn’t work well.
The results: only 8 of 17 trades got to 1R. Somehow I need to get this up to between 60-70% or it’s always going to be a struggle. Combined with this, I let too many trade play out. I should have gotten out at or near BE a lot more. I tend to do better when I manage my trades “scared”, especially on a day like today.
Price has done a nice job of reconciling most of Monday's sell off. It could turn down at any time, but there are a couple more areas to the upside that could be tested. These extend all the way up to the 45.60 area.
To the downside:
There was an overnight surge from 44.34 to 44.57 that should be retraced at some point. This may be required to refuel the market before much more movement to the upside can take place.
