POLL...(Chart)-What would you risk?

[Breakout]

Quote from NKNY:

Also wouldn't go short there but if I was forced to I would like to see a small breakout from the previous high and then a failure back under resistance. I would then enter a trade short with a stop over the new peak. This is also called a 2B trade by trader vic.

Good luck

Nick

Right, it's what Trader Vic calls a 2B pattern, or if you were around before Trader Vic, it's what you would call fading resistance.

Trader Vic says after price makes higher high, to wait for price
to reverse and close below the resistance line.

Personally, I like to "anticipate". When I'm right, I can usually
get a 4 or 5 tick "head start" on the guys waiting for "confirmation.

I've noticed a lot of you are saying you wouldn't short
there. It's really not a bad trade guys.

I promised I wouldn't show the rest of the chart, but I will say this, the market does reverse "shortly" and head back down (a lot!) just as someone who fades resistance would expect.

 

[dbphoenix]

Quote from Breakout:


I promised I wouldn't show the rest of the chart, but I will say this, the market does reverse "shortly" and head back down (a lot!) just as someone who fades resistance would expect.

Doesn't really matter whether you show the rest of the chart or not. Based on what you've provided, there's really no way of determining the proper course of action. Therefore, one must be prepared for either a breakout or a reversal. To determine that, it would help to know more about the level at which you'd plan to short.

 

[Breakout]

Quote from dbphoenix:



Doesn't really matter whether you show the rest of the chart or not.

I don't want to show the rest of the chart, because I'm not trying to prove anybody right or wrong. This is just one trade of a thousand.

Based on what you've provided, there's really no way of determining the proper course of action.

It's just a simple trade "fading resistance". Traders do it all the time.


Therefore, one must be prepared for either a breakout or a reversal. To determine that, it would help to know more about the level at which you'd plan to short.

Right, and I'm preparing for a reversal. And, I'm going short at 892.50

 

[dbphoenix]

But why a reversal at that particular point? The fact that it was reached once doesn't necessarily make it resistance. What if price were to break through that level instead? Would you be prepared, or would you just let the trade go? How would you distinguish between a breakout and a potential 2B? And so on.

Not trying to be argumentative, but the reason why so many people so often end up on the wrong side of the trade is that, in their efforts to keep things simple, they ignore information that would put them in the right place at the right time.

 

[Breakout]

Quote from dbphoenix:

But why a reversal at that particular point?

Because it's a test of a recent high(IMHO)


The fact that it was reached once doesn't necessarily make it resistance.

That's true, and you can wait for a second or
third test if you want, if you feel that will improve your odds. I'm comfortable taking the first test, though.


What if price were to break through that level instead?

Happens all the time, and that was the point of the poll.


Would you be prepared, or would you just let the trade go?

If you mean, not have a stop loss in, no, I'm not just going to let the trade go and hope it comes back. I'll get out if the market proves me wrong.



How would you distinguish between a breakout and a potential 2B? And so on.


It's just a simple trade, fading resistance. It'll either work or it won't. If you want to trade a breakout, go long when it pushes through. If you want to trade a 2B pattern, then wait for price to push thru resistance and then reverse and close below resistance.


Not trying to be argumentative, but the reason why so many people so often end up on the wrong side of the trade is that, in their efforts to keep things simple, they ignore information that would put them in the right place at the right time.

Traders don't "so often" wind up on the wrong side trading support and resistance levels. They're easy to see and very often prove significant. But, if you feel they're are other things to watch that will improve my chances, I'm all ears.

 

[dbphoenix]

You're making a number of assumptions that are not supported by the chart you've posted, perhaps because you have a context and the rest of us don't. You say, for example, that price is testing a recent high, but there's no way of determining that with this chart, any more than one can shoot a close-up of somebody's eyeball and ask that the photograph be identified. As to the second or third test, there's no way of knowing from this chart how many times this level has been tested, if it's been tested at all.

As for hoping that the price doesn't break out, that's not what I'd called a fully-formed strategy.

As for the "2B", there's more to it than is presented here. Is the price, for example, in an uptrend or a downtrend? If it's in a trend, has that trend been broken? This is a "simple" trade only because you're leaving so much out. Are there any elements that would improve your chances? I have no idea. You've cropped off so much that the trade becomes essentially a random one.

 

[Breakout]

Quote from dbphoenix:

You're making a number of assumptions that are not supported by the chart you've posted, perhaps because you have a context and the rest of us don't. You say, for example, that price is testing a recent high, but there's no way of determining that with this chart, any more than one can shoot a close-up of somebody's eyeball and ask that the photograph be identified. As to the second or third test, there's no way of knowing from this chart how many times this level has been tested, if it's been tested at all.

As for hoping that the price doesn't break out, that's not what I'd called a fully-formed strategy.

As for the "2B", there's more to it than is presented here. Is the price, for example, in an uptrend or a downtrend? If it's in a trend, has that trend been broken? This is a "simple" trade only because you're leaving so much out. Are there any elements that would improve your chances? I have no idea. You've cropped off so much that the trade becomes essentially a random one.

I thought you didn't want to be argumentative?...lol

Okay, just forget it. You don't like the trade. That's cool...let's move on to something else.

 

[Breakout]

Quote from AMT4SWA:

Stop at the 893.50 area. You are going short against uptrending price so I would want a tighter stop but not so close that tests of the 892.50 area stop you out right away. My stop at 893.50 is also higher from the current 892.25 price level than the full range of the current price bar (stop 1.25 above current price > current price bar has 1.0 pt range 891.25 to 892.25). If price did bounce at the 892.50 area and drop, I would probably take quick profits on this trade unless I had signs that the market was starting to breakdown here (in other words, I would need some confirmation to stay in the trade for more than about 2 points). If a good drop took place after failed attempts to break the 892.50 price level and then price action quickly broke through 890.25, then I would stay in the trade and see what happens at the 889.50 price level. At this point (890.25 price level has broken) I would move my stop down to BE.

Thanks...looks like a good sound plan...

 

[AMT4SWA]

I take trades like this often. If the price bounces and stalls I take quick profits. If the price bounces and drops, I try to ride it for some extra profits. If the price blows through, no big deal I would be stopped out and on to the next trade. Now if price stayed in the 892.50 area for several bars with no drop or bounce, then I would exit the trade and re-evaluate the situation.

Chris

 

[Breakout]

Quote from AMT4SWA:

I take trades like this often. If the price bounces and stalls I take quick profits. If the price bounces and drops, I try to ride it for some extra profits. If the price blows through, no big deal I would be stopped out and on to the next trade. Now if price stayed in the 892.50 area for several bars with no drop or bounce, then I would exit the trade and re-evaluate the situation.

Chris

Okay, and if the trade does go your way,( drops quickly) you don't lower your stop to BE until you have about 8 ticks profit?

That's something I've been struggling with. Lately, if I'm showing
4 ticks I'm lowering to BE, and of course I'm getting a lot of scratches. Somtimes I regret it, sometimes it was the right thing to do...