Before moving on from this, I will point out to those who are following along that if one focuses on the state of one's trade rather than on what price is doing, he will most likely miss the opportunities being provided by the market. This focus on one's self is a behavior that is difficult to extinguish, but if one does not in fact extinguish it, the behavior's presence will result in continuing frustration.
Given that these interactions are more like passing notes in class than face-to-face exchanges (and sometimes like relying on messages in bottles), they can go on so long that the point is lost. Therefore, like a soap opera that's been cancelled, I'll attempt to wrap this up, and those who are interested can make of it what they will according to their circumstances.
If one is trading reversals, an entry at 37.5 is late. One knows it is late because the market says so by triggering the trader's stop. If one were to note what price is doing in the "rejection bar (or interval)", particularly if he were following the right tick, he would see the advantages of entering just above that bar, perhaps 34 or 34.5 (the danger point here would be 32+/-). If he missed this or if such an entry would be outside his risk tolerance, he might also note the right-tick-retracement noted by the arrows and enter at 36 +/-. To wait longer, however, while decreasing the information risk, increases the price risk since other traders will be being given the opportunity to react (which they do).
(the context for this chart will be found in the Hindsight Thread,
yesterday's entry)
But even if one enters late, if he is focused on the fact that he just got stopped out instead of the continuing opportunities that the market is providing, he would like not see at all the next opportunity in the very next set of intervals: 0946, 0947, 0948, 0949, which together constitute the next retracement. This, however, involves trading retracements rather than the reversal, and the market is not always so accommodating as it is here. If one is going to trade reversals, he needs to assume the additional information risk and trade reversals. If he will not assume the additional information risk and prefers to wait for the additional price risk represented by retracements, he is entitled to do so but he must also be willing to accept the possibility that the market may not make a retracement available, in which case he will "miss it". There is, in other words, no "risk-free" trade; there is only a choice of what type of risk and how much of it one is willing to assume. This choice must be based on a thorough knowledge of the territory and thorough competence in mapping it rather than on what one has to do to assuage his fears.
If one can't focus on price behavior rather than on his trade and whether or not he was right to take it and whether or not he's losing money on it or might lose money on it, whatever success he enjoys will more likely be random rather than deliberate. These fears are nothing more than shadows on the wall and must be put in their place if one is to progress. The second mouse often winds up with no cheese at all.
