Was your INITIAL entry a long entry at the top of the wick? That is, at the blue triangle this is your long initial entry OR is the blue triangle an initial short entry? You have it labeled as a sell or a short. Please clarify. Your platform is a bit confusing (at least to me). However, for you to have incurred a loss I assume you entered long at the blue triangle at 4410.75 and got stopped out with a loss at 4407.75. Have I assumed correctly? I want to make some comments this weekend if you will clarify this soon. You said you are having a problem getting in too late on a move.
Ok cafeole Another long post ROFLMAO. You said you are having problems getting in late. Then you get stopped out with a loss. You went long at 4410.75 at the blue triangle marker you said in your chart below (first chart) on that bear doji after the initial BO bar of the open. You got stopped out at 4407.75. A three point SL. Here is why you got stopped out with a loss. YOUR SL IS TOO TIGHT FOR THIS SORT OF A TRADE. You are probably using a SL of X amount of points or X amount of $$$ i.e. a monetary Stop loss. That is OK but in a BO situation I use a wider SL. Things are moving fast and I could get SL out seconds after entry. To give the trade room to work out there are proper places for a SL in a BO. I use a PA SL, not a set amount of points or $$, and I will manage it as the trade evolves according to the dynamics at the moment. By dynamics I mean not just the fact that a certain price was made, but "how" it was made. Fast ...slow...hopping...paint drying...etc. Look now at the next chart down that I have annotated. It is the same 2 min chart just from my platform. And it is from a RTH's view chart. Yours is from a 24 hour chart, it appears. Notice the opening 2 min bar on my chart. The blue box is the GAP up opening on RTH's chart. The green box is a way of visualizing this gap joined together with the opening first 2 min bar. It is often useful to picture this on gaps. That the gap becomes a part of that bar. I mean viewing the gap and the opening bar as ONE bar. Do you see the SIZE or range of that now combined green bar that is now ONE BAR, and the bullish close of that bar? It is unlikely that entire distance will be lost on the next bar where you placed your trade. Of course it could, but the odds are there will be a second leg up before any reversal. A second leg big enough for a scalp. The problem is this also reflects fast movement and far reaching movement. In short volatility. Things hopping. Back and forth. It is OK to take a late entry like you did on the next bar BUT in BO situations, the correct SL, is my little top horizontal red line I have drawn in. That is the minimum SL I would use. It is a price action SL, not a set amount points SL. nor a monetary SL. Why is that the minimum SL? Because strong BO's can have deep PB's before the move continues! I know this is counter - intuitive as one would think a strong bull BO = more upside so the SL can be real tight. Wrong! What will happen usually, is what happened to you. A deep enough move south against your entry , even on the same entry bar, to tag your SL and you find yourself out of the trade faster that a speeding bullet (so to speak). Therefore, you have to give the trade room to work. It is such a strong BO it is highly unlikely that a PB will hit a correctly placed SL at the bottom of the BO bar, but it could, and if it did I would certainly want to be taken out, under most conditions unless I had already averaged in and that will be explained later in this post. Suffice to say that I would adjust my SL down wider if I had already averaged in and price was approaching my minimum SL. If I had not average down I would likely just take the minimum SL. But again, it is unlikely price would get to it in such a big BO (think green box as one BO bar). The bar of your entry is bear doji and it is after that BO bar. There was nothing wrong by entering long late, there at your entry, or even long on the next bar, which was a good size bull bar. But if I did so I would have to place my SL wide enough to keep me in the trade AND give me some room to average down by adding to my position as price moved against me. The blue box is the gap or what happened overnight as the RTH's opened. Now look at the purple horizontal lines running across the chart. They measure the distance of the GAP plus the range of the opening bar and show where a 50% PB of that total move is at on the chart. That could even be a WIDER SL placement (the middle line i.e. the 50% purple line). I don't use FIBS as many traders do but I do take note of 50% retracements. That is a logical place and is related to a psychological tendency of humans to gauge their confidence or lack of confidence in a move at about halfway point. It is OK too to also place a SL even if a wider SL than the min SL which is at the low of the opening bar. Look at my little middle orange colored short horizontal line. It represents a 50% PB of the overnight gap. But it also represents around a 65% to 70% retracement of the entire the opening gap overnight move up plus the movement to the top of the opening bar. You can see this when you compare it to the purple horizontal line that run across the chart. This last SL is below that middle purple horizontal line. This is the very biggest SL I would use. Why? because if there is a PB or reversal that goes below 70% of the previous bull move I want out and right away because price has likely reversed. it is no longer a deep PB; it is a reversal. Remember, in PB's the previous trend continues. In reversals the trend reverses. Some traders would place a max SL at that bottom red horizontal. That is too much for a scalper IMO. Even if I used that 70% mentioned in the paragraph above I likely would not let it get that far. I would just get out. My widest SL would probably be that middle purple long horizontal line. My initial SL would be the bottom of the opening bar (little top red line) but if need be I would adjust it down to a max of that purple line to average in more. Ok lets look at my bottom chart. Take note of those green horizontal lines running across my chart. They represent my prime and secondary averaging down areas. My prime area is the top half of those greens lines. That is I have no problem averaging down to 50% of that bull bar (middle green line). Why no problem? This is a BO. There is gonna be volatility. It slightly more likely, that price will not even reach the mid point of that bar on any PB even a PB on the same bar (as price moves up and down the bar quickly) or any other PB like the implied PB that was your entry bar. AN implied PB is not an actual PB on the TF you are looking at but on a smaller time frame it is an actual PB. If you were to dial down to a 1 min or 30 second chart you would see that your entry bar is an actual PB on one or both of those TF's. An actual PB is when an opposite move to the trend has a bar that goes below the low of the previous bar. Your entry bar was a bear doji. It was not an actual PB on the 2 min TF as it did not go below the low of the previous bar. But on a smaller TF than your 2 min, it absolutely is an actual PB. So what would I be doing if I had take your entry. Well I would be happily averaging down anywhere in my prime averaging down area. I would simply be betting that price will continue up on such a strong BO bar (especially if I look at the BO as one bar consisting of the overnight trend represented by the gap and the entire movement of the opening bar (i.e. the green box). I would even average down in my secondary area which is the bottom half of those green lines. That is getting close to my initial SL (bottom of the opening bar) and if price kept going down and I had been averaging down I would simply adjust my SL to the next wider SL to keep me in the trade and give me more room for even more averaging down, NOT to get me out of a loss. I have already pointed out my very widest SL which is that little orange middle that represents about a 65% to 70% PB. At that point I am dumping any averaged down position, if I had not already dumped it. At that point I would consider PA to now be in a reversal that will likely go in a bear channel. Finally back to your entries and your loss. What would have happened had you used the min SL as I explained above? Of course, you would have made a good profit even if you didn't average down. Now what would have happened if you had averaged down in the prime area once your entry bar went below the high of the opening bar. A very good profit as the bull moved resumed! As a matter of fact I would have been averaging down BEFORE the prime area was reached (top green line). Another long post. Hope it makes sense. Bottom line your entry was fine. Your SL was not conducive to BO price action. Wider SL's are needed in BO situations. It is counter-intuitive but it is what works best for myself. Mr. Brooks deals with the whole thing in his books and courses.
Thanks for all the info. I believe you are right. I will take that into account in future BO trades. I really appreciate you taking time to do this.
Actually, I am on sim right now. I want to see consistency in my sim trading before going live. I am using 2 sim accounts - one where I actually measure my performance as if live, the other where I try out different approaches and timeframes.
If I may, something else to be looked at... With the initial risk and a scale-in game plan under control, BO trade or not, where would the long trade that was taken be closed/exited had it not been stopped? From a scalping and confidence viewpoint, the concept of R:R may not be applicable. For some, the R:R concept is ingrained, to the point of presenting still more trading issues that need to be tackled. If not applicable to the discussion or the traders involved, my apologies for mentioning and please continue.