Hello volpri, Thanks for the illustration and question. Yes, for that chart, I would say price would go down more from what I see. I would go short at the close of that bar with light blue arrow.
I will explain my views on the holy grail of trading, but I think my view of things will be better understood if I first point out certain parallels between trading and chess (aside from the fact that both depend on some combination of pattern recognition and exact calculation). Beginning chess players become obsessed with the study of chess openings out of all proportion to their true importance. Yes, openings are fascinating and more books and monograms probably have been written about openings than any other aspect of the game. But top players know that the only purpose of the opening is to get you to a playable middle game, that other phases of the game are more important (middle game, end game, transitions between phases of the game, and of course time management since rated games are always played with a time clock), with attention to the end game paying especially large dividends. When it comes to trading, I think amateurs like me tend to focus disproportionately on entry signals--the trading equivalent of chess openings--and often overlook what I think the reality is: entry signals exist only to get you into a viable position in the markets, but it is probably the least important aspect. Entry techniques have a role to play, but the true holy grail of trading, I strongly suspect, consists of bet sizing, stop placement, and exit strategies. I think entry strategies are as overrated in trading as openings are in chess. Some of the greatest grandmasters advised new players to begin with the study of the end game, and, after attaining proficiency in other aspects of the game, commence study of the openings last. If there existed a systematic and thorough course of study for trading, rather than everyone being forced to learn different aspects of the field piecemeal without initially knowing which features are of major or minor importance, it should probably teach bet sizing, stop placement, and exit strategies first, followed by technical and fundamental analysis, then the selection of an appropriate time frame to trade (a choice that interacts with all other factors of trading), and last of all the entry techniques that I suspect command an inordinate amount of study time, back testing, and trading literature among traders searching for the "holy grail." Just my two cents. Free advice is rarely worth more than you pay for it.
I guess it may depend on your strategy, but I am believer in below saying. Buffet is a long term investor, but he sure times his entries well. In Real Estate, Money Is Made On The Purchase, Not On The Sale
That is the difference between investing and trading. PE's matter when you hold long term, not when you are doing a quick flip. Short term trading is mainly about exploiting mass psychology.
Plot the 3-day simple moving average. When it is sloping up, buy; when it slopes down, sell. No stops, no shorting. Trade TQQQ, SPXL, UWM, and UDOW. This strategy does not work on everything, but it works on these. You're welcome.
The market tends to correct itself. If you are in a losing position and forgot to set a stop loss may as well let it ride until the market returns to a value close to your original position.
What shart time frame would you use for this? And why does it work on TQQQ and those others you noted but not everything? Thanks.
Plot the SMA on any chart time and see what happens and any ticker once you've done that. Although first you may want to research those tickers. Try doing some of your own thoughtful research and at least doing something (like this right now) before asking for the end-all be-all answer that nobody has.