Standing on our own
A few of my notions about this business.
As sequence traders, we like to play hit and run.
When we find “snow fences“, we are careful to suspect breakouts, breakdowns. Today’s marginal high at 89.5 was a completion target, so we expected profit taking.
We think traders get an edge by knowing where (sometimes when) profits should be gathered by the Big Boyz.
Joining in that contra play, if we are right, allows us to at least get a portion of a 456 pullback.
If we add contracts to a position, we always suggest that they need to stand on their own…meaning if the market is plunging and we are adding, we cannot let the additions get us into a losing position. We would rather be conservative rather than give all our profits back by “shorting too low”. So scale ins must stand on their own merit, as if none of the other contracts matter.
Aggressive early gap players are taken out, and then the stage is set for the Mirror Trade; late longs who are complacently buying the pullbacks get a rather rude reminder that there is no free lunch.
If we hit and run… we look for re entry. Today’s 76 support was a classic example…
We suggested to our members that they may want to be conservative in the middle, and consider that 87.25 Demon as our friend, with primary battle at the 85.5 cigar.
Got to love the Blue line.
“We need this to turn under the blue line, the opposite of yesterday afternoon’s trade.”
I cannot explain it; after watching so many charts, intuition jumps out at me and I can see the sequence…
Targets at 74 ahead of the gap; then the resistance at 79 to 80 for the gap, the 69.5 target (to break stops); then the 63 to 64 for a bounce (profit taking) then 74 resistance for the re entry, target 62.5 support. T1 was 62.88, and T2 55.25.
Markets can turn on a dime; so we are using dynamic pivots that constantly change as the market gives us new information.
The Psychology part of today was to load the boat, as usual, with traders who cannot read charts, whether they are Market Profile, or time based.
We were nervous about any breakout longs today above 88.75, after reviewing the daily chart.
As we make progress, we can trail, add, cover.
Aggressive or Conservative?
If you are aggressive, and add as you make progress… each new addition should be able to stand on it’s own. If it shows a loss, then that position (s) need to be closed.
Keep it simple.