Two things. 1. Why no short at around 10:50? Because we are near 50% of the previous up move from 9:50-10:22? 2. I find that when price moves a great distance in one direction without a retracement where a 1 min bar prints "within" another 1 min bar (sorry to talk in bars, I see now there are retracements going on technically all the time) that the 50% area gets tested often and seems to be a better opportunity. Like the first 15 minutes of today. Even yesterday although the price range was tight we went from the high to the low without a retracement then 50% was a worthy opportunity. I am going to review more hindsight charts for this type of behavior. Have you noticed this type of action DB?
There was some discussion of that, and if one were being mechanical, and many people have to be at the beginning, depending on how FU they are, then, yes, there'd be a short there. But I was explaining that I like to see a little panic behind those trades, particularly when breaking out. This one was very dull, at least in real time, watching the bars form. OTOH, when price fell out of this a couple of bars later, WHAM!, and the rally effort was so pitiful, the short became a much higher probability trade. There are no hard and fast rules for exits. My experience with cascades is that it's best to exit as soon as the cascade runs into trouble, then re-enter at the first opportunity. In fact, if there's a substantial rally, one can make more by re-entering than if he had stayed in throughout. And you never really know how much rally you're going to get. As regards the 50% level, if there's been no retracement in the meantime, and sometimes there isn't, that level is an excellent opportunity to re-enter if everything else falls into place. I took all the exits noted on this chart, by the way, even though I expected price to drop much lower, partly because I allowed for price to take at least a couple of days to get there, and price could have rallied much higher than it did. But once each exit was taken, I looked for the first opportunity to get back in. Parabolic moves up or down are fun and even exciting, but you absolutely must stay in the saddle. Otherwise you're thrown and getting trampled. If you can keep your seat, you can do very well on days like today.
I was certainly locked into that one. Previously I would have been wow look at that thing go now what do I do. Good stuff as always DB.
Thank you, wisdom is always appreciated. I factored in "important"levels to exit the whole position, but your point is very interesting and logical, you can always reevaluate at 50% and reenter at a better price.
I know I arrived late and this was probably covered in chat, but why holding the short from 8:45 after the SL break + HL + Break of LSH + 50% crossing. My guess it that it was because of context (where we were located) and the fact that the 50% level was rejected really fast. But I can be wrong and wanted to make sure. With what I have now, I would have most likely scratched that short and reenter after the open (not sure about getting filled though)
The fact that 3740 was tested and rejected meant much more than a test off the open. Even so, what did I have to lose? A couple of points? We'd been up there for two days. It was time.
What I love the most about trading, is that one can keep on learning day after day, there is no monotony involved .