So you have an admitted failed scalp trade that didn't work out. You then decided to turn it into a swing trade even though the reasoning for entering in the first place (a quick 10 point bounce) has long passed. Just a quick glance at the DAX and I see three days in Dec that had a gap up that still have not been filled! At prices between 10700 and 11200!

- What rationale do you have for staying short this market with your current position?
Main arguments are described below as GAP-UP and FED rate hike, but if I do the technicals I will probably find arguments as well since I will looking for it!
- What are the actual chances that gap ups in a up trending market will be filled (statistics; you must have some evidence to back this up)? The only statistics are written below, but as I learned when I got to know 'fractals' life is a cyclical thing, sure we are allowed to go straight up, but we can only go further if we go a bit down before going up again.
- What 'time' horizon are you speaking of for this to take place?
Obviously when the FED is going to hike and chances were raised this month.
- How far are you willing for prices to continue going against you?
I have reasoned a lot while I was in this bad trade and for some reason I kept thinking about... a weekly profit. Which is dynamic in terms of points, but isn't in terms of time. I am thinking about putting in 1 week as a maximum loss, which depends on how much I made in that week before a trade goes bad.
- Are you going to try to manage and scale your position to work your way out? If so, how?
A good question, what I come up with is, because of the fact I trade smaller contracts now. I can average my trade to better price levels. Right now, I am able to put in 3 contracts of 50 cents, which give me some room if things go bad! My target still is 10 points. As I ultimately won't be able to put in more than 1 contract because my robot will take over the scalping ultimately, trying to get me more than 10 points!
- Are you going to look for a larger swing target with this trade or just another 10 tick scalp?
Yes, I am going to look for larger targets as in a scalp, not a swing target. Although as you noticed when a trade goes bad, I have arguments put in before I took the trade to stay in it. Yes, the GAP-UP was a major argument to stay in it, because it has a good chance of closing. Statistics lacks on this, but I can say that gaps often close within the first hour of trading, around 80%. Which means that around 20% needs more time... and while a portion of that 20% is still open, now being THIS close to an All Time High, it should be logical to expect a reversal to fill my target, eventually.
- Where is your longer term analysis for this trade?
I wrote up a quick GAP-UP story and a FED rate hike, I admit this to be rather summier...



Why?! Why would you be willing to exit for a measly 10 point profit but be willing to let a loss run out of control just because the market "gapped-up"? Your "secure opportunities" comment suggests that this trade might have not been a good one to being with, yet you're willing to hold onto it as it loses you money? Not to mention the only "secure opportunity" that could even exist in trading is knowing how much risk you are taking on. Something that your trading strategy is currently lacking.

Your entries and exits, including your targets and stops, all contradict one another. BB entry for a scalp, target based on points achieved not the analysis as per entry, losing trades you turn into swing positions even though they were taken with no swing analysis in mind. No solid plan for exits/losses at all.. What are you doing man?


Perhaps I am wrong and you have all of this thought out but your journal tells us a different story.

I felt I should address this here and not a PM, as I think it is more important to have this critique as part of your journal. Please take this seriously and I mean all of this with good intentions as I would prefer to not see you blow up your account in the future.

Another good candle for entries came by after my second trade entry... but I had to leave my desk!

Also... I thought about 'questions comes more easily than answers'...

To decide whether or not to place an order in the market for your stop, you first need to know where it would go.. Devise an appropriate exit strategy for your setups. I've mentioned it to you before about a simple ATR volatility based exit as a starting point at least. Try something and test it, adjust, test, adjust, test, etc.

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