If you would like I will give you how I would read this price action and your trade entry. But it was your trade so I ask first. I am not sure what your exit criteria you mentioned is (that would have made it a winner) but I suspect it would have been correct.
No pride of ownership, go ahead and analyze it. Not greedy, I exit if one long green candle comes next.
That would have been the correct exit. And what I would have done. I marked up the chart showing my perspective as I would see it in terms of price action and how I would have traded it. To consider averaging down and/or whittling down the context (immediate and larger) have to support it. So, let's look at it. (I am using the NQ chart as QQQ tracks NQ) First chart is a 5 minute chart Open gap down. Then a leg down (yellow arrow) followed by a leg up. That was followed by another leg down then a fourth leg up (all legs are the yellow arrows). By the 10th bar from the open I am drawing in the rectangle connecting the open bar with the high of the 10th bar (bear bar). The temporary bottom of the rectangle is the double bottom area of the first leg down. So, I am anticipating an evolving TR. But I like to wait for three legs down/up and 20 bars sideways to call it a TR and to use TR techniques. However, I am anticipating a TR by going ahead and drawing in a rectangle before that happens. By the beginning of that 4th leg (4th yellow arrow up)we have 20 bars so for me it is now a TR, In addition, looking to the left we can see the FBO (failed BO) and that within 5 bars price went back into the TR and began that third leg (down). Also look at the red dotted line. By the beginning of the 4th up leg we could actually draw that in as a potential resistance area with the TR above the middle of the TR but below the top of the TR. So, what will price do when t gets there? We don't know until it gets there. Now notice that 4th leg (yellow) up and the slanted grey oval that encompasses those bars within that leg up. Look at those bars in that oval. 7 bull bars 6 are dojis. Dojis are 1 bar TRs which means that buyers and seller are about equaling applying pressures however they are all bull dojis so buying pressure is slightly stronger. Now look at the bars again in that grey slanted oval. They are all overlapping. So, while there is some bullish pressure there are also active bearish pressure. By the 6th bar price has reached the red resistance dotted line. Your entry bar is indicated by that vertical down pointing orange colored arrow. No let's look at the now established larger context. We got an established TR with 4 legs up/down. We got a bullish FBO of the now drawn in rectangle. AND we can now ALSO draw in a triangle pattern (blue lines). A symmetrical triangle is a sideways PA that is also BO mode. PRICE CANNOT STAY THERE. Now usually when the BO comes it will attempt a BO out in either direction 50% chance in either direction, south or north. Then it usually will come back to test the BO point (apex of the triangle). Not always, but usually. And following the test we usually see the real directional BO. To sum up: We got a gap down open. We got an established 4 leg TR. By the time your entry bar is formed price is trading in the top 1/3 of the TR. Now remember one good technique for TRs is to fade the outer edges. So, these factors are the first and second larger context. The third larger context we have a symmetrical triangle. Remember, that whittling down must be supported by the larger context. At least that is so to put odds in one's favor that it will work out. Lets look at the immediate context preceding your entry bar. We have a resistance point (red dotted line.) We are at the BO point of the triangle. We are ALSO in the top 1/3 of the TR. Both the contexts larger and immediate favor shorting NOT going long. So, averaging down favors averaging down in the short direction and so does whittling down. I know that 4th leg up looks promising for a successful BO but if one looks at it closely it really is not that promising. Price is MORE likely to trade down not up. Now look at the entry. Your entry was likely around 21,300 area of the NQ. (green horizontal line). It was a reasonable long entry IF one was trading ONLY for a QUICK scalp as your entry was just above the middle of the TR but it should not be followed too far with a PT (profit target) because price is getting close to the top 1/4 of the TR and remember we fade TR edges. So, had I taken your long trade I would have exited on the very next bull bar and captured around 37 NQ points exiting at the red solid line. That is also the bar you said you would have exited on had you followed your criteria. The better trade would have been to short and average down as it moved to the top of the TR and if any whittling was done then it should be done outside the top of the TR betting that any BO out of the top would fail and price would go back down towards the top or into the TR. Price came back to test the apex of the triangle and then headed south which was the real BO. Your attempt to average down and whittle down were an attempt at doing it long which was not really supported by the larger and immediate context. OK I know this hindsight highlighting but maybe it helps to understand the process for averaging down and also utilizing whittling down. BOTTOM LINE THE CONTEXT MUST BE CORRECT AND SUPPORT THE ACTION OF BOTH TECHNIQUES. One thing I have not mentioned is momentum and that too is a factor but I have said enough I think. But momentum is an element that likely needs to be considered also. The second chart is a 15 minute chart showing an even larger context and the third chart is a 2 minute chart showing and even more detailed chart of the price action. Especially take note of the overlapping bars in that grey slanted oval on the 2m chart. Not such a strong move but that would lead to a BO of the TR but instead a move that more likely would lead to a FBO of the TR. 37 points is a GREAT scalp in the NQ. I don't know if you draw in patterns like rectangles and triangles...flags..PBs.. pennants...trendlines. It is helpful to do that in order to better see the pressures in PA. I do so but often then erase them when they are no longer relevant so as to keep my chart clean as the session progresses. It is easy to miss PA pressures. Drawing in the patterns helps one to see those pressures and react accordingly. And I look at EACH bar and ask "what happened on this bar." This is more instinctual with myself but learning PA requires an intentional effort to do so. This is PA action trading bar by bar. It is not a pub crawl LOL.
The chart is also wedge tops and bottoms in the TR area. And there is a lower high MTR (major trend reversal) and a lower low MTR in the TR. And a failed wedge bottom on that big push down that you exited on. So that makes it a parabolic wedge bottom with a MM (measured move) down. It is also a Successful BO of the bottom of the trading range. Finally it is a "sell the close" on that big move down. Each of these scenarios can be traded using different techniques. That is the world of PA trading. Most of the time there are multiple simultaneous moves that can be traded in different ways.
Thanks, I really appreciate you took the time to analyze this NQ chart for me. Make sense. If I were to perfect average down, I need to modify my method. To answer your main questions, yes, I do quick scalps and hunt for quick small profits. No indicators or drawings, etc. The only indicator is the candles. And yes, I was expecting the TR to continue.
You are welcome. Context is more important than any single trade setup IMO. Drawing patterns helps me to "see" the context. My entries are then based on the PA of last few bars within that context. I do break a lot of traditional rules that seem to be established for trading as long as the context is correct. If momentum also indicates something, then I may fudge a little on context. As always, I will adjust PTs and SLs as price action unfolds. You had the right trade to take (per your criteria) i.e. a quick long scalp, and you would have been fine. Nevertheless, it was the wrong context for whittling down long. Whittling down short would have worked quite well had an initial short position been enacted. Of course this is all hindsight. Things look different when it is happening live. That is why I draw....erase...redraw..patterns to help me stay focused on context. The same thing with the EMA. I don't trade EMA crossovers but it does help to clarify certain setups within certain larger and immediate contexts. For example in a MTR (major trend reversal) From a bear trend I want to see a trend (trendline) followed by an opposite push through the EMA, then a test of the previous low of the trendline THEN a reversal to go long with a signal bar and an entry point. In this example it is a LL MTR (lower low MTR). A major trend reversal doesn't mean a huge trend up as the name seems to imply but rather it means a TWO or MORE-legged reversal up. One leg..a PB.. a second leg or more legs. But wait the larger context is a TR and the immediate context is that grey oval with dojis and overlapping bars indicating weakness along with price approaching the top 1/4 of the ESTABLISHED TR so on this TF (5m) the LL MTR wood likely only have one leg up on THIS 5m chart. To see the two or more legs I would have to dial down to the smaller TF (second chart which is a 2m chart). Note: I left drawings in place so they may looked skewed when compared to the 5m chart but the focal point is the legs on that move up. If I went down to a 1m chart I would see even more legs and more PBs.
Here is another MTR on the same 5m chart. There are usually multiple ways to trade Price Action. All can be feasible ways. Much depends on what one "sees." For me drawing helps me to "see" the different ways and I can choose which one of the multiple ways I want to trade. In this one too the larger context is a TR and of course that symmetrical triangle is part of the larger context. Looking at it this way it still favored averaging down and whittling down but in the short direction. Why? Gap down open. FBO near top of orange trendline. LH MTR. Price in top 1/3 to 1/4 TR. All these PA dynamics favor a move south. Why? Market inertia and they all show weakness. Markets tend to keep doing what they are doing at least for a while until an outside force is exerted (such as momentum on leg #2) then we see a successful BO south out of the TR motion) Of course, things can and often will change at any time. That is why we trade in a sea of uncertainty or a grey fog as we navigate trading. Traders look for certainty and for sure setups but there are NONE. There are only tendencies, inertia, pressures, probabilities, and possibilities. Drawing helps me to "see" and to navigate these things and navigate the uncertainties but I "realize" at any moment I can be wrong in my assessment because I can never know all the variables that enter in to "why" a move took place. So, I have to be ready with "what" I will do IF my assessment profits out to be wrong. I try to base my premise for entering on a 60% chance it will move enough in my direction to give me a scalp before it would hit my SL but I KNOW that there is a 40% chance I can be wrong. So, what will I do if my premise is wrong and I am caught out in the cold? I best have a jacket under my arm.
To complicate (depending on if you see it as complexity or OPPORTUNITY) matters even further there are several wedge tops and wedge bottoms in this blank chart above. Anyone game to draw them in? PA is multifaceted. It shows many faces in many different forms. Techniques and strategies can be developed to trade the different aspects of PA. Much depends on "what" one sees and what tactic they use to trade what they see. This is why it takes a lot of practice preferably on a SIM to learn how to "see" the many faces of PA and to develop strategies and tactics or techniques to trade those faces in ways that suit your personality. IMO there is no sense trading live if a trader can't make it work on a SIM for themselves they will not be able to make it work live. The ONLY way to gain confidence is to practice. The only way to get good is to practice. The only way to make money is to constantly be sharpening one's skills through more PRACTICE. Price action trading can take a long time to get really good at it. But once learned NO one can take that skill from you. Not the insitutions. Not the market. Not any other traders. It is like general George Patton said of world war 2 fame concerning freezing in combat: When you see the American soldier next to your side get blown to pieces you will "know" what to do.
Here is a short video on a SIM capturing 58.25 points in around 20 minutes. 100% win rate. High win rate is an important metric for scalping small profits. The larger context=SPBL trend. The more immediate context: An expanding triangle. On expanding triangles, the idea is to look for reversals off the bottom or fade the bottom. If price is at the top of the expanding triangle, then fade it or look for reversals south. Remember larger context is by far more important than individual setups and trades. Patterns show the immediate context where setups can be found and implemented. Drawing patterns helps me to "see" how the bullish and bearish pressures that are being applied in PA as PA is evolving. Finally practice on a SIM hones skills.