Hi Longshot...thanks for the post!...lol No, I'm not a loser. I have a number I use (risk) with success, but I thought it might be interesting to see what some of the other guys were doing, and helpful to other traders starting out.
Looks like an up-trend to me, so I wouldn't be shorting there (a bit higher, sure, since I'd be expecting a small pullback). But if I HAD to short there, I would use a 1 pt stop loss. -FastTrader
Stop at the 893.50 area. You are going short against uptrending price so I would want a tighter stop but not so close that tests of the 892.50 area stop you out right away. My stop at 893.50 is also higher from the current 892.25 price level than the full range of the current price bar (stop 1.25 above current price > current price bar has 1.0 pt range 891.25 to 892.25). If price did bounce at the 892.50 area and drop, I would probably take quick profits on this trade unless I had signs that the market was starting to breakdown here (in other words, I would need some confirmation to stay in the trade for more than about 2 points). If a good drop took place after failed attempts to break the 892.50 price level and then price action quickly broke through 890.25, then I would stay in the trade and see what happens at the 889.50 price level. At this point (890.25 price level has broken) I would move my stop down to BE.
Also wouldn't go short there but if I was forced to I would like to see a small breakout from the previous high and then a failure back under resistance. I would then enter a trade short with a stop over the new peak. This is also called a 2B trade by trader vic. Good luck Nick
it's 1pm....price has just retested and is looking to test again the high of the day....how do you think floor traders make money? they move the market....so......you think they aren't gonna see if it breaks out? its certainly a low risk play to them....unless there is a program sell they own the market right here. i never play breakouts in the afternoon (i will capture them using other entry methods). i did some statistics and it wasn't a great %. turns out that the best thing you can do is either enter at 10:30am, or at a failure of that trend (in the afternoon). a failure is once price has pulled back and tested a pivot level (and once again moves away from the pivot level) on the 5min charts, and then that pivot fails.
This entry could prove profitable, but only if the entry precision was significantly modified. The entry point this guy has chosen here certainly wouldn't look anywhere near wise to a shark-scaled professional. It's the kind of situation where I'll not only be watching the depth levels building and subtracting, to see where the actual S/R's are, rather than on the chart, but also the tape, waiting for 250-car lots to give more median direction, 100-lots to tell me where the other scalpers want to take it short-term, as well as particularly for lots of (probably red) 1-4 car orders scrolling through, as a contrarian signal. I won't explain what I mean with using low-quant lots on the tape as a contrarian signal. I'd say you can think your own part about that. Hint : It's got to do with the harsh reality of the markets. It's better to be the shark than the shark's dinner. So, sure I wouldn't do a longer-term short play on it. After all, it looks like there's a good amount of strength in the pattern, there's an uptrend with higher lows, and there's too many bars closing higher, and the shapes in general are much more conducive to continuation either way. Certainly not the ideal setup for a double-top, at least not on the chart. I'd have to look at correlation to the other index as well as market internals to make that decision. Just to look at one chart, on top of that without volume, isn't exactly conducive to making a good decision regarding stop-placement. You need to give more information. You don't need any TA, indicators, any snakeoil humbug like that whatsoever. But you do need both price and volume to make a proper evaluation. Now, where would I place my stop for the scalp then? First, I'd preferably enter 1-2 ticks above your entry anyway to squeeze up my prob, since the locals are gonna take the market there for stop hounding anyway. Also, you then have a minor-TF swing that's continued for 8-9 Ticks, which (given current ~8-13T swing range) drastically increases prob for a short-term pullback of at least 6T from that turn. Preferably, I'd put my stop 4T above a 10T-continuation peak entry, since a 14T-swing is relatively unlikely on ES, turns tend to go at max ~13T. If I was forced to take your entry - which I honestly wouldn't, even for a scalp (Unless you tied me up and threatened to gag me with the pair of socks you've been wearing for the last 3 weeks), then I'd have to take a 6T-risk, because given the swing it's likely the floories will take it up there and take you out for dinner otherwise. While this, IMHO, is a silly R:R ratio, this is what you're asking for. I'd lock in at least 1/2, if not 3/4 as soon as the pos goes 4-5T in my favor, then close out the other half at 7-8T profit, most probably. But since your entry would neither offer 1) The low risk-stop required to do so nor 2) Offer locking in these kind of profits on reversal of the swing, since you're selling right in the middle of the swing, I would 3) Never take such a trade. Compliments, Scientist.
Trader Nick, 2B is a smarter move to make here indeed, but is even more "cheating" on the original setup given by the thread starter than my own! We're getting into smarter trading - And therefore I think we're getting off-topic here! A simple alternative to the rather surgical approach given in my own post, it still has a significantly higher probability than the original trade discussed here. But again, only if forced would I... Scientist.
To answer your question I would place stop 5 ticks above this entry. Looking at this chart cycle pattern I would not expect any major reversal move till after 14:00 . Walter