I believe it is necessary to add in terms of context, that this reversal after the open took place at the bottom of the 60 minute channel line - so a trade at an extreme...which makes it a very good setup...
Not if you're working left to right. The short-term channel is drawn from the swing high on the 20th across the swing high on the 23rd. The higher high on the 26th and the higher low on the 27th might now make for a trend change for this period, but there's no way of knowing until either is breached. One can find many opportunities to draw lines such as yours, especially in very short timeframes. But to do so negates the value of detecting the overbought and oversold conditions that trend channels provide. Given the longer-term trend, the activity from the 20th thru the 25th may be just a retracement. There's really no way of knowing until this pause in the 22 area resolves itself. And the time of year doesn't help clarify the situation. Price could just vacillate between 35 and 4. That might signal a trend change, but not a reversal. OTOH, 30pts is not a bad range to trade if it's clean. If it isn't, I have plenty of other things to do.
Thanks a lot, DB. I will also read section 15 again. As a freelancer I'm used to get payed for the time I invest, but obviously this is very different in trading. But slowly it seems that I'm able to switch from taking mediocre opportnities to wait for the good ones. The focus on a fixed timeperiod where the best ones mostly occur is a help which should not be underestimated. At the end it's all about size - which is able to make ones day, week etc.
I've said this more times than I can remember, but it nearly always whizzes right by all but a very few. You make a living not by the minutiae of what you trade and how you trade it and when you trade it and where you trade it but by size. And there's no way in hell that one is going to trade sufficient size unless he has a trading plan that he can trust absolutely. And one can't develop a trading plan he can trust absolutely without extensive study, research, experimentation, and practice. Anyone who thinks otherwise is doomed. This won't change the number of struggling traders who lalala I-can't-hear-you, but there it is.
Personally I have to say that I have problems to incorporate trend in my trading plan. It is not too hard to create setups based on price action at certain landmarks, but in terms of being unbiased it is obviously not helpful to follow a fixed "only trade in the direction of the trend" paradigma. Can this be solved by creating a plan for the day for example? In general it is about the gyration in between soft and hard factors...
Coming down to cases, this was the current situation I saw - and traded. Trend is sideways to down. Price was approaching a potential level (3208), but buying pressure was fading. I first traded the DT, but after the bounce of the 50% I got out with a one tick loss. I reentered with the break of the hinge. Still holding..trading one contract I will exit with the break of the line...
My problem is how to bring the general approach, the daily plan and the setups together in context of a global backtesting. Or is it only necessary to backtest the setups themselves?