To clarify, it was more of a scalp trade, 1 to 1 risk to reward, quickly get in and out. I wasn't looking to short it very long. From past experience with strong support and resistance there is usually at least some little and quick bounce off which I was trying to catch. But the comments regarding the trade idea being flawed are interesting, since it was into the close, which is more volatile. Also, not very familiar with S&P price action, this was more something I noticed in Forex, and something that tends to happen more during normal price action rather than unusual events like news events, or in this case the close of the day, maybe combined with some unusual price action.
I like the idea and think it has merit. For every person that says its a bad idea, then just go long at your resistance level, and that will obviously fail enough times as well. In fact, if you came here saying that going long at resistance has caused you to lose money, people would more than likely be telling you that you are doing something wrong. So shorting at what you perceive is resistance is actually the better trade.
I do see that your resistance level was from June 26, which had 4 rejections at 3080, based on a 5 minute chart, so a bounce here made sense.
I think though that its not right to say, as your thread title shows, that stop losses are killing you. The action at this level wasn't really just running the stops. Price stayed above 3085 for over 5 minutes. When its just a poke of a level, by my definition, it reverses much faster, if it is indeed just a poke.
So now the question is, if this happens to you often, how to fix it? As I mentioned first, going long vs. short isn't the answer, cause this will more than likely also not work half the time. But we can work with the R:R numbers. Clearly, to make this profitable, if we are winning half of these trades, then our win needs to be bigger than our loss. If you want to use 5 points as a stop, look over how many times the trade would hit something like 10 points profit. Perhaps the trick will be to use a 3 point stop, and 5 point target, and this might prove to be profitable.
The last idea is scaling in. You can clearly see that price did eventually come back down to your 5 point profit, which would have been around 3075, but not until much later in the evening. The thing though is that if you see that 90% of a time, scaling in will save your trades, then perhaps this is something to look into. You of course need to adjust you max pain threshold, and be prepared to scale in when its going against you, but if it increases your win rate from 50% to 90%, it can work wonders. Granted, a big loss will still happen every now and then, but the lessening of the frustration of being run over all the time might have a positive psychological impact. Once again though, you need to have a firm grasp of where and how to scale in, and when to finally bail, and make sure this loss doesn't cripple you. With scaling in, I like to think along the lines of adding another contract when it goes 10 points against me, and then work on a break even exit, so that I can get out without a loss, even if price doesn't come down to my entry level.
