Ammo, Thank you for your posts, charts, and commentary, even with your ADD I read them Sharing some experience... Best place to short an inverse head and shoulder is above the neck. Especially if you don't mind a little heat. Most of them will want to come back to the neck for a retest, this is where you can reduce risk, and if things go well, it will eventually fail to flip the neck and end up taking the shoulder and many times the head as well for new legs. Not saying this is the case here, as you know, we never know the outcome of the markets, but I was taught to play necks this way and based on my experience and realized profits, I know of no better way. I can honestly tell you it's the herd the one who tries to buy the breakouts. Pays to think outside the box. In other words, don't short below the neck, only above it, or you could find yourself painfully early as they are usually "designed" to trap buyers high. ESD
Re - herd buys breakouts. It's not bad, already up 70+% in 8 months. Due to headfakes & most importantly not knowing how to trade breakouts they are looked upon as a 0 edge strategy, but in my experience breakouts are a necessity as up trends need new highs & down trends new lows. Just like Ammo scales into a position, with breakouts I scale in until I hit the right one. That way you are warranted to be on right side when it breaks. Plus I increase size after every failed breakout. I only deal with daily & upwards levels.
JSSMPK, I read your journal. If you ever catch a long consolidation, that does not break out but instead keeps faking both sides my understanding is that you could be in trouble. On top of that, due to your martingalish sizing you are only using a very small portion of your capital correct ? You mentioned something like 5% max pain, does that mean you are 70% up on the capital used to achieve no more than 5% max pain or 70% on all capital ? I hope you see my point you don't want to trick yourself, underleverage is also problematic as we want to move all of our capital. For what is worth, what ESD shared is pure gold. In fact, I will add the following, in downtrends fading bullish reversals is money, and in uptrends fading bearish reversals the same but only after they look "confirmed", full trap in effect. As he said, must learn to think outside the box to survive this game because as you know, it's damn brutal.
My pleasure. Yes, precisely, I see heat as opportunity until I realize I'm dead wrong, much like Ammo, then time to take the loss and move on to the next trade. The balance is of course obtained by letting winners run full blast, without this, you don't stand a chance.
Do you mean that if you trade a breakout and it fails, you exit the position and try again with larger size on the next attempt to break that level?
NH, what is your technique for riding winners? Do you trail a stop, scale out, base exits on price action near major levels, exit on pushes to new highs/lows and re-enter on pullbacks, or...?
Yes but he takes the opposite side on the next trade as far as I recall from his journal posts. However, he is underusing capital a great deal, and this is a problem. For instance, if he loses 5 in a row he loses 5% of his capital, therefore, Im assuming his 70% claim is only on the chunk of the capital used for the 5 attempts and not on the full capital he used to based his max 5% risk.
I don't trail stops, I'm either wrong or I get my targets, no bullshit in the middle as this kills my expectancy. Breakeven trades do not exist in my trading only winners and losses.