Technical Strategy

Here's a paraphrase from something that was kindly linked by Gucci on the IR thread.

Directly relevant with ominous undertones.


Quote from Jack Hershey:

The normal thing is for a person to take an action and hold as it goes against him. This is "hope" trading…

Obviously, when I mentor I am instructing the person to stay in the market to make money and if the action he takes doesn't make money he washes as an action that is double the contracts needed to wash so it is a reversal. That means he is always looking at the markets as a market he is in and it is his one and only job to always be on the right side of the market...

Most traders do not think about being on the right side of the market very much. They are sidelined looking to get in the market and the rest of the time, when in the market, they are "hoping"…

Doing wash trades prior to having losing trades for any reason in the hope category is a good beginning. Making a wash trade a reversal trade is not a bad idea either since this reversal can be washed too if necessary.

To facilitate all of this there is a leading indicator of price. I can tell you that it becomes an indicator that is believed like no other once a person starts taking money out of the market by being in the market…

Those consecutive failures are stating that the person does not know how to stay on the right side of the market…

Drills train. Training gives understanding. Understanding produces skills. Skills make money.

Learning failure works the identical same way. 7 consecutive failures teach failure. Repeated failure creates biochemicals and instinctive reactions. Misunderstandings result. Capital is depleted. The trader leaves trading forever. Lesson: do not do failure.
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Quote from nkhoi:

In my case I waited for a third red bar with increasing vol in order to have a r2r. It didn't appear so it's just a continuation.
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I agree that it signalled continuation, and I was doing hope trading.

Felt wrong to exit and not be in the market, while at the same time, by dint of prior experience, distinctly uncomfortable to reverse in the direction of the channel VE at the high of the day.

I think bad reversals at the extremes of the day have taught me failure in that context, which I hope is not irrevocable.
 
The Day

(n.b. ignore lowest thick black line)

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2323716>
 

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Entry and three reversals.

Intrabar, (I think) bar 10 did confirm my point 3 down.

If I'd mentally removed the gap, we'd be past a long traverse VE by now, which changes the situation somewhat. Even though sequence continuity may supercede geometric continuity, carrying all the lines over still feels like the natural and right thing to do.


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Reversed short on the pennant breakout after the sequence completion and Traverse VE, then back long on the subsequent formation breakout.


<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2324690>
 

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