Worst behavior possible in opening positions in my case a short straddle: 1. Getting short at low of the market, despite right assessment of trend (short term direction 4 hours) 'market worked against me' 2. than getting long on top of correction and false breakout 'market worked against me' 3. than panicing and made short trade a new low 'market worked against me' That's a clear challenge of human trade execution. A program possibly would have opened a straddle with simultaneously opening both legs at market prices. What is your experience and do you advise?
A safe way to enter is, after identifying the trend up or down, wait for the first horizontal continuation pattern of five minutes or more and simply do a stop order above it, if going long, or below it, if going short. Then set your initial stop loss at one and a half to twice the width of the pattern on the side opposite your order. Oh, and don't open your full position initially, of course.
jack cruzan crgarcia I have a good actual one for you (see attachment). Guess where a lot of novice traders covered and sold. Today's trading scenario was typical trap. Look at the wide range of the Dow and what happened at the edges. ... and what I would have done (I was ready to join the crowd). But I was fully invested into my short straddle and couldn't exit because of huge bid-ask spreads. I had no money to hedge, hence no money left to make typical mistakes. Yes, crgarcia is right, business is business - NO EMOTIONS. But sorry, I have EMOTIONS. That's why I put this into the Psychology thread. Please don't hesitate to post here in an open manner like I do!
It's very cool to be able to differentiate between continuation and change. Take a look at this link, people have posted charts for the ES and come to a different conclusion to you, using words like "beautiful" rather than "typical trap". http://www.elitetrader.com/vb/showthread.php?s=&threadid=83604&perpage=40&pagenumber=66
=============== 1]Say its a daytrade [on swingtrade SPY/ES /QQQ would have been profitable most likely], most trends were down past week. 2]Planned Scale in helps;here are some ways to work with market. 3]Frankly GG12 getting short on lows can happen to anyone; with enough time,it can be profitable. Speaking of time, say that chart is chicago time, seldom if ever take a daytrade trade last half hour.Swingtrade entry is fine then Especially with a week with most of trends down in ES,SPY,QQQ; time is on your side shorting especially in mourning,,not necessarily last half hour, plus last half hour its wilder/disorderly then. Also false breakouts on long side are very common when most of trends are down
PointOne You are right that it's better to think positive and 'typical trap' bears negative associations. On the other side it was not 'beautiful' at the edges for me yesterday. DOW made an expanding triangle. We had two times a 'false' (or to say 'beautiful'?) break of trendlines. I haven been tempted to trade two times in the wrong direction yesterday, but I ran out of money by opening a beautiful short stangle in the morning, which made good profit, since the Dow moved only 5 points on a closing base.
murray I agree with your assessment of short term trend. But the main trend on a 1 year basis is UP (see attachment). I was betting on a sideways movement. I didn't expect big swings. So, I was forecasting a wrong intraday volatility. Finally it work for me because the Dow nealy finished where it closed on day before. Planned scale in might work. By the nature of options I am automatically scaling in - getting higher delta - on progress in my direction. But yesterday I opened a short straddle position, which made me nervous at the edges. (It's a kind of scale in into losses...) Getting short on lows can happen to anyone, same as getting long on highs. I didn't do backtesting - but in expanding triangles there is no way it can be made profitable. Or am I wrong? I agree with you that the market has a profile for each hour (or even half-hours). Highest vola: 9:30 - 10:00, quite: 12-1, fuzzy: 3:30-4, etc.
The first questions I would ask myself are: - what are those lines for? why did I draw them? - are the lines helping me to make trading decisions? - if yes, when? where? how? - if the lines can help me to make trading decisions, then why am I scared? or hesitate? Writing down your answers might reveil some hidden situations.