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Around minute 7 he talks about "wait a minute, how can a trader risk so much to make so little", but then says that often a trader can get out early before letting it hit his stop. At this point the trader has bought 1 contract near the top of the leg, buys a 2nd contract 1 pt lower, and holds all the way until the first contract is breakeven and second contract is a 1 pt profit, and exits there. So my question is, if the 5 bear bar pullback and later a double top lower high possible MTR with good signal, which led to 3 bear bar pullback, to around 50% of the way to the stop, is not enough to cause a trader to exit early before letting it hit the stop, then what is?
If this chart isn't enough to cause a trader to exit early, then I can only assume it would have to be an even stronger pullback, which means exiting after like 3 strong bars which is probably then 75%+ of the way to the stop, which means that the trader is indeed risking a lot to make so little, and doesn't have much room to exit before his stop is hit.
Just feels inconsistent, anyone help clarify?
Which video no. and which slide no. ?
My apologies. This is for video 35C, slide 6, around 10:20, where he talks about the big risk versus reward where a trader is likely to not let his stop get hit. But it wasn't very clear when someone is likely to, or should exit the trade early before stop getting hit. I just know if I were trading this live, I probably would have been faked out into thinking there was a possible LH MTR here, and not held until my original entry hit breakeven.
Thanks Mr. Carpet for the detailed reply. I really liked the comment about the test of the prior breakout, where I see that we basically maintained that as a breakout gap or negative gap. The spot I was considering selling was the bear bar that is two bars after your 'E' (on my pic, 'F'), which in my mind is a failed breakout of the tight trading range before it, a test of the initial breakdown point below the doji at the top before 'A', and high enough up in the range with enough bars in this sequence that it felt like a credible LH MTR. I assume even more stuck bulls would have exited on the test of the low of that doji before 'A' and wouldn't look to buy again for 5-10 bars. I do see that selling after those 3 bear bars (after 'F') would be selling at the bottom of a potential trading range, and those bear bars had a lot of overlap and conspicuous tails. I also see that if I did sell here, I could possibly re-enter on the bull bar 5 bars later (on my pic, 'G'), though this wasn't the point of the discussion in the actual video.
So my new questions are:
Do you think 'F' is not a reasonable sell for the bulls?
After the strong bull bar after 'E', can we move our stop below 'C' expecting the gap to be maintained if this is to remain bullish? I guess that is one way that we would not have let our original stop be hit -- if we moved our stop up.
Thanks again.
