Shocking move up overnight to tell you the truth. But lets just deal with what is now!
First the stuff on my chart going into the open.
A - DL from after the news spike up.
B - DL including more of the overnight action from before the news spike.
C - Initial SL I was tracking that broke before the open
D - The legit SL, practically horizontal, which takes into account the swing high just before the open.
O - We open here. If I was using the SL at "C", I've got a beautiful RET in there to go long which would fill on this opening bar, but it only pokes above the swing high just before the open and price comes down, going below where the stop would be.
Oh, the other essential thing to point out is the range that forms before the open. Its a solid range, well formed for an hour before the open. Ranges are even better than my trendlines I think. Its more "in the market" because actual upper and lower price levels form where traders are unwilling to go beyond. So here just before the open, we break above the range, which makes that possible long even jucier, but we drop into the range when it fails.
E - I mark in this possible short. The trouble is that we are now still within that pre-market range. It does appear we rejected going higher, but we haven't broken lower yet. The stop would be above this bar. Also, this happens at my DL, not below it.
F - Here is another solid short I think. Once again, stop just above this bar. 3 bars earlier we formed a swing high here, so if price comes down to fill this entry, there might be a nice level of resistnace forming (kind of micro R in the whole grand scheme of things though.. not like an hourly R level).
What I don't like about this entry is that there are 4 overlapping bars... so I'd be entering inside a range, so although the trend is down at the moment, I've got this tiny range now, and the pre-market range to the left, and it could be anybody's guess which way we break.
G - So here is the perfect RET. The bar is fully below that DL and we have broken below the range. The testing I did was with my 1 tick entries, but I can't get that order in fast enough, and I do want to give it a bit more room, so I use the standard 1 point from SLA. So I mark in where the trade should be via the down arrow, but you also see the red triangle that comes from the platform of where my actual filled entry is.
Today has been quite the interesting day so far. The opening volume was huge, over 6000 contracts but price moved only 4 points. All these other moves look so... methodical. Neither side is showing strong conviction. Price is coming down, but it doesn't look easy.
H - So right after my entry, price does go against me, but you know what, I'm not sweating it. I've got my stop placed well, 2 ticks above the bar at G at 78, and with my entry at 74, this is a 4 point stop, so I've got a target of 4270 for my profit. I'm hell bent on price reaching either of the two, and I don't care which because the trade was entered properly.
I - So price does break out lower, and it comes right down to this bottom tick of this bar above "I". This is exactly where my profit target is and it doesn't fill but jumps back up. Darnit... So I did slide my profit target up by 1 tick. I just figured if we come down again and bounce off this level one move time since we bounced off so easily I might still not get a fill and I wanted to make sure I got these profits.
As it turns out, price did come down again and even lower, so I gave up $5 for nothing.
But at least I did get $71 out of this trade. Its really not so much about the money... its about doing what I should and not sweating it because I'm following rules.
J - Price shoots up hard after this, but it not only doesn't break the previous high at "H", it also doesn't hit the high above my entry bar above "G" which is where my stop would be, so if I was going for a 2:1 target, its still possible, and in my stats, I had often seen that before reaching the higher multiple targets, price could retrace almost all the way close to the stop and turn back down to fulfill the 2:1 or 3:1 target.
This to me means that a short below this bar is completely legit. It would fill, and provide an easy 3:1 target, but this bar is only 6 ticks high so its not a whole lot of profit.
In fact, every single RET on the way down today works for at least a 1:1 target. After the open, I count 5 RETs where each trade reaches 1:1 at the very least, so contracts could easily have been added.
K - So this lower high is a bit of a problem for this downtrend, and I'm now starting to draw in my hinge. The trouble with hinges is that they are so easy to spot on an EOD chart, but in real time, I find I have to redraw the lines often. You might start with a tight hinge and it looks like its breaking, but then it forms a wide hinge just outside the original hinge. So taking a hinge exit right away is tricky.
L - For this reason, you wanna wait for the RET, and here it is from the hinge exit. The stop would be the high of the previous bar and its good enough for a 1:1 trade.
M - So we do have another higher low here, but I'm clearly not looking for another trade anymore. After about the first hour, I don't find anything good. The volume has dropped off, and I have no idea what the trend is anymore. Sure its still down from the open, but if I had to get in here, I have no idea if I'd want to go long or short. It would be a different matter if I was already in a trade from higher up and just looking to scale out of contracts, but trying to trade in here is probably just good for scalping, and you know what, the bots have that very well covered I think.
SUMMARY
So today was actually quite nice. There was lots of hesitation, but knowing firmly where an exit would be, the trade just takes care of itself. There really were at least half a dozen trades that worked today for at least 1:1. Its true that I could have held my contract for more profit, and even gotten in sooner as we quickly rejected the open and came down, and I will work on holding longer as I progress. Lets face it though, I can't hold for a 20 point move if I don't learn to hold for at least a 1:1 profit... correct?
Drawing these charts up is kind of fun for me... and I'm so happy to have my MC working well again (Let's blame my loss yesterday on the platform not working!
LOL). And it feels good to have rules to follow. I just have to figure out what I need to do after the first trade. And if the first trade fails... what I need to see to re-enter in the same direction, or what I need to see to take the opposite side.
I think that eventually I will lose even these 5 min trendlines. I think the RET will be all that is needed along with the context of what happened earlier, where the rejected levels are, where the ranges are, and of course where we are in the whole grand scheme of things.
I have read Db say several times that he only trades RETs. Not that I'm trying to following him religiously, but for those reading who believe he knows what he's talking about, it would be foolish to assume that he hasn't looked into so many other options. I may have a scalping system for now, but having a way to practice the critical entry and stop is necessary I think before the huge profit targets can be sought out. So this all comes down to mastering the retracement. But what do you guys think... is the retracement the holy grail or not?
