Spotlight Trade
I have been reviewing my trades even harder recently. I review the trades I have taken and compare the entry timing of my trade with the trade signal. I also consider signals my system has given, but where I did not take the trade. I discovered a consistent theme of trades that were profitable, but I was filtering out the signal and consistently not entering these trades.
When I received a signal while price was "ledging" sideways, I would not take these trades vary often. There was a short trade earlier this day that I should have traded but passed. So when this trade occurred I was more determined to "believe my signal" and take the trade.
To see this pattern, start at the low at 11:50 CT. I had a "counter trend" long signal here but focus on trend trades until I have built up more profits for the day. From this low there was a nice price rally higher followed by a retracement back down to the 1535.00 price.
One quick tag of 1535 and price shot up above 1536. My entry signal came on the 12:08 CT pop higher. Initially I thought I had a "run-away" where the possible trade entry price was too far from the signal. Then I felt that price was "ledging" sideways. Some people call this sideways price action a coil or shelf. Still others would say this is the right shoulder of an inverted head and shoulders pattern. The low being the head in the pattern.
I entered at 1536.00 still having my doubts. Then price did a quick press lower towards 1535 again. I thought to myself here we go, the market wants to test my stop and see how much room I'll give this trade to survive. Then even faster price shot higher again. Can you say blast off!
My first half was out at 2 points. When price seemed to stop pushing higher, I only allowed a few ticks and took the remaining profits off at 1.5 points. I was so elated that I took this trade and it worked that I missed the re-entry at 1537.00 as price retraced back down to test the "launch point" and only rally back up to the swing high point.
I don't usually look for head and shoulder patterns as a part of my trade signals. I only noticed this pattern when I wrote this blog entry. The standard H&S target, from the head to the neckline, was not reached. I would have liked an extra point for my second half of my position. :-)
Trade Wise, Trade Well
John
2 comments:
I added your blog to my google reader and I look forward to reading your stuff everyday. I like how you've dedicated a good portion to the study of volume trends in each trade. I hope to learn some tell tale signs of what to look out for on certain volume patterns. Very interesting.
That for the comment FlatWallet.
I feel that Volume can help me with "tells" of what the market is trying to do. I like to see increasing volume on my 5-minute chart for a trend to continue. Then I like to see lighter volume on any pulls backs in the move as well.
Trade Wise, Trade Well,
John
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