Daytrading Breakouts in the ES
- Thread starter Johnny Rotten
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I actually almost went short after the 3:15 low was violated. Even though it was well inside the bollinger bands that wide range pattern that formed up around it just looked bearish to me. Again, I chickened out though. Looks like this would have been a good trade. I hope I'm not diverging from the system, but to me that looks like a trade that follows "the spirit" of the system, if you will.
This will not only drive you crazy but could set you back by months.
Forget about going by feelings and "looks". Find a set of rules that seems to work, paper trade it until you're sure whether it works or not, then, if it does work, leave it the hell alone until it doesn't work anymore.
June 17, the 3.35pm breakout in the ES that failed:
I see some of you are trying to "think" and grapple with the discretionary part of trade selection. That's good. It means you're improving your skills. What I would say is this, try to 'step back' and think things through in their entirity when deciding whether to trade a given pivot high/low. People have made several valid points:
- the pivot's low was not taken out
- we had more bars in the pullback than I prefer
- we only had 40 minutes until the market closed
and I would add one more thought to the analysis:
- the market had been "shit" all day either giving no signals or one's that didn't make money.
The point about a double high is not so worrisome when the two bars are side-by-side. I just don't like a double high when there are a few bars distance between the highs. Don't ask me why: I just don't like it. In the same way, I don't like Outside bars!
Trade selection is like a jigsaw. You've got to put all the pieces together to make a decision. I realise that the breakout may have technically fit most of the rules (but not all i.e. the pivot's low not exceeded), but there were enough 'concerns' to say no. You can afford to overlook one rule (or sometimes two) if everything else is screaming how great it looks. But nothing at this time screamed how great it looked. There were also no Eurex symbols for comparison at that time either. At 3:35pm the logical conclusion should have been "shit day" and to walk away. Today was the kind of day when only the Gurus made money!
However, no-one is going to be perfect and you will pick losers no matter how careful you are. So as one person asked: where would the stop have gone? My answer is: one tick below the breakout bar ...since that bar turned into a very strong reversal bar down. You don't want to see that SHIT on the very first bar! When that happens, the market isn't just wiggling lower, it's telling you that something is very wrong with the trade and possibly it was a bull trap. So my stop would have gone one tick under that reversal bar down.
I see some of you are trying to "think" and grapple with the discretionary part of trade selection. That's good. It means you're improving your skills. What I would say is this, try to 'step back' and think things through in their entirity when deciding whether to trade a given pivot high/low. People have made several valid points:
- the pivot's low was not taken out
- we had more bars in the pullback than I prefer
- we only had 40 minutes until the market closed
and I would add one more thought to the analysis:
- the market had been "shit" all day either giving no signals or one's that didn't make money.
The point about a double high is not so worrisome when the two bars are side-by-side. I just don't like a double high when there are a few bars distance between the highs. Don't ask me why: I just don't like it. In the same way, I don't like Outside bars!
Trade selection is like a jigsaw. You've got to put all the pieces together to make a decision. I realise that the breakout may have technically fit most of the rules (but not all i.e. the pivot's low not exceeded), but there were enough 'concerns' to say no. You can afford to overlook one rule (or sometimes two) if everything else is screaming how great it looks. But nothing at this time screamed how great it looked. There were also no Eurex symbols for comparison at that time either. At 3:35pm the logical conclusion should have been "shit day" and to walk away. Today was the kind of day when only the Gurus made money!
However, no-one is going to be perfect and you will pick losers no matter how careful you are. So as one person asked: where would the stop have gone? My answer is: one tick below the breakout bar ...since that bar turned into a very strong reversal bar down. You don't want to see that SHIT on the very first bar! When that happens, the market isn't just wiggling lower, it's telling you that something is very wrong with the trade and possibly it was a bull trap. So my stop would have gone one tick under that reversal bar down.
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