I would take the higher Probability trade. That is trading the PB. See blue notes. This is bar counting. After PB first attempt is L1, second attempt to continue south is L2 or low 2. Context is strong bearish see red arrow down. L2 at MA and two 1 bar trading ranges (i.e. doji) and at MA. Odd favor continuation. L2 is the second attempt by the market to continue. That is where I would short. Closest SL has to be at 50% PB of red arrow on left for this trade and even for your trade. I show where I would have exited for a several point scalp. …green. iYour trade SL would still be same as mine. Trades need room to work. I would have either put on a position and at increments average down more short as it moved against me see yellow markers. Three ways to play this if averaging down. Start big and at each increment cut your adding in 1/2 of last increment size. Or start small add same position size on each subsequent scaling in, as it moves against you. Or start small and double up on each scale in. Then you only need a small move in your favor to make $$. It appears you waited too late to start scaling in. Then you got scared and covered way below the correct SL (yellow). The context was good for shorting. You got the direction right but didn’t use the right tactics. If I had taken you trade but I averaged down in increments I would exit once my position renders me a scalpers profit (1 to 8 point) even if Lose or BE on my initial entry. As long as my averaged down position show the overall trade printing money. Whatever the market doest after my exit it doesn’t matter. I have locked in a scalpers profit. I can always jump back in if need be. Greedy scalpers get scalped! A good scalpers takes what the market hands him when the taking is good. That then becomes a successful trade. Markets probe all day long in both directions searching for more transactions. Scalps can be in the money and in seconds …poof ….disappeared into thin air. I just grab em while the grabbing is good.
Few of us can day trade like @volpri averaging down, adding to a losing trade. I tried, it didn't work for me.
I did at one time, then thought there has to be a better way ... for me. Which is adding on certain circumstances within the trend. Though my real preference, and what I do most times, is go all-in (3 or multiples of 3) and exit in stages depending on PA and stops.
Dear Mr. Volpri, Thanks for your clean and concise reply. I printed out and study it many times. I also realized that the structure of thinking before enter a trade is important and I have a lot to learn and practice to reach your level. You did a great favor for me. Wish you a nice weekend!
I used to think the same. I also read a lot of guru for don't add into position, don't average down. Until I come across Volpri post. The way he showed his trade and explained inspired me and I give it a chance (practicing average down). I do not know if I can perform as good as Mr. Volpri yet but I was the kind who test and retry a lot before give up.
Yesterday was a good trend day for Us.500. In the picture below is "all buy" trades that I was take. However, I got bias because of the lost yesterday so I locked profit and got out of the market when has profit equal to stop loss. Should improve in reading market situation more. The scalp method is to wait for a pull back to ema 20, has an bull bar and buy after the bull bar closed. Took profit at the recent previous high. I got back around 50% of yesterday loss. (Still a pain in ass for me ( )
Your chart image for yesterday shows exactly why ... I don't scalp. Why jump in and out when price is trending strongly?
His chart is a picture of a SPBL (small pullback bull trend) These are some of the strongest trends although not necessarily accompanied by volatility. These are program buying. Every PB is being bought. There is more than one way to trade this: One way is like he did, jumping in and out locking in profits. Another way is taking a position and adding to it on every subsequent PB and holding all positions until a reversal takes place. Another way is taking the largest position first (all in) on the initial entry and just hold until a reversal or the end of the session. Another way is martingale on PB’s. That is double whatever position size you have on and do so on PB’s. Then exit on a few swing highs and lock in profits before any reversal takes place. Repeat the process. The reason for exiting and not holding until a reversal when martingaling is because a reversal can come at any time and can be quite dramatic wiping out profits in seconds and creating a substantial loss.
The way I trade trends is using Clayburg DDF technique 1st 5 min range midpoint (RTH hours) which showed more volume and price above than below and where close of 1st hour trading is - so it said to only take long trades. Keep's one on the right of the market 75-85% of the time, Today is a day it was dead wrong, and why I always use stops. Then flip my bias once it breaks 50% of range of total day, like it did @11.20am.