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Wed 9-3-25
This is yesterday's PA. I STC of 38 looking for a test of the lows. 39 though moved really fast and hit 1R (based on the signal bar) almost immediately. When it hit 1R, 39 pulled back 2/3rds of its size and made me worry a little bit. I thought, what if it's a break below a bear channel and 75% of rev? What if the bulls are strong enough to protect buy climax low? These were my initial thoughts as it was pulling back. I didn't expect a deep intra-bar PB because I thought 2nd leg initiation, surprise/give-up bars likely, vacuum test down to support, and a fast move down. I exited 1R, which is around the low of 39, and didn't hold for my original target. It was an emotional exit rather than a calculated one. 1R and my original target were not far off, so I thought take the exit and see what happens and don't risk a PB. I also thought that the magnet is so close that it will likely be tested, but I didn't hold primarily because I felt uncomfortable during 39. I knew I was selling low in the TR and it made me "itchy" to exit. I've had positions turn red on me on vacuum tests, and I was not looking to replicate that here. I am not really sure what I did though was reasonable. I believe the signal bar, the entry, and the stop are fine for a scalp. I am not sure about the exit though.
What do you think? Was my management fine, or did fear take over and lead to bad decisions?
You answered your own question:
"It was an emotional exit"
Trading isn't about being right (and this is difficult to accept because everyone is so into predictions - that isn't how this works). Trading is about being wrong, the management of that, and having tested sufficiently that over similar situations there is a positive edge.
Trading is about managing risk. It is both as simple and complex as that. When you took the trade, did you see the potential resistance before accepting the 1R? If it wasn't noticed, and fully accepted then there is difficulty - because if really accepted, then any outcome, independent of what happens, will be "fine". What happens next is incidental. There will be some charts that support it, and others that don't (noted that most only consider the chart in front of them and that is it, counting the $$$).
Taking a trade means the acceptance of the outcome. This acceptance must come from experience and testing, and that helps to build confidence over time. Decisions made "in the heat of the moment" actually negatively affect any learning in favor of "being right". Being right is a problem because it is based on a single instance.
Was it a reasonable sell? Yes because the bar had closed below resistance of many bars, the bias is downwards. The previous sentence provides a probability skew but without a guarantee. The appropriate stop and management of that trade is what will lead to success, independent of how the next bars show up on the chart. Watching the price behavior provides some insight into the strength of a move. However, please remember that swing trading is lower probability to begin with. The future is unknowable, and that is always going to feel somewhat uncomfortable. . . until one has "faced the heat" and survived through good management. Then, one knows that decisions are based on "being alright" vs being right, and that one will be alright, independent of what happens, because the management of the trade "makes it so".
This all comes overtime, and "micromanagement" includes variables which may be difficult to reverse engineer consistently.
Hopefully helpful and good trades to you!
Great answer! The ultimate edge in trading is being able to successfully manage risk that others don't want to assume.
Yes, support.
While you are not a robot, which is a great thing, emotions are a negative indicator to learning. They prohibit learning because most are "trying to prove" they "have it", without actually evaluating against a plan. A trade doesn't make a difference. Testing for edge over a series is what provides realistic feedback.
And this is why it takes so long. Because feelings do not provide good feedback. If you have a plan, and can follow it, you can evaluate your edge. Anything else is unfortunately guesswork, no matter how you feel about it.
Trading is support, resistance, momentum, and probability. Probability doesn't show without many trades to evaluate a specific situation. The 5 minute chart is a great chart where the volatility is not over ridden by the "signal".
If you followed your plan, then after 20+ trades of a similar instance, you will be able to begin to say - yes, this was good. If not, then adjustments can be made. This is simple, but not easy. Emotions make it harder.
Tom Hougaard has it right j- Best Loser Wins. Because he doesn't have to win on every trade and has a proven edge.
Hopefully helpful & good trades to you.
I wanted to add one additional aspect. Within Al's books he outlines important support / resistant areas. Additionally, with respect to intra bar evaluations for strength, he includes the relevant aspects which his experience has indicated are relevant (and they are). In the written 3 books you will find areas where lists are outlined. They are very important and accurate. As an example, in measuring strength of a breakout for success, he outlines many characteristics to emphasize this strength, such as series of bars, closing on their highs. These should be reviewed to ensure consistency with what one develops, as Al spent a lot of time deciphering the critical keys.
Good trades to you!
When you took the trade, did you see the potential resistance before accepting the 1R?
Can you point that out? did you mean support?
I viewed the intra-bar deep PB 39 as a sign of weakness and exited sooner because of the trend CH line. I thought the market was finding support there, and it was overshooting the line. Also, in retrospect, I think it's justifiable to hold for a test of the bottom of the leg, thinking that the bulls will step in there. I didn't think that in real time, probably due to inexperience on my part. The information on 15D signs of strong BOs came to my mind about intra-bar PBs. 39 pulled back more than half the size of the bar, and I chose to exit at 1R at that point, which is still a positive trader's equation.
I know it was more of on the "fly" approach, but day by day, I see the market differently as I am learning and realizing new things. I felt more confident managing the trade that way. I'll write down my thoughts as 38-39 was happening.
38 closed. Initial thoughts were 2nd leg initiation after a Leg 1 and sideways pause. HSB or truncated wedge for the bulls failed, and it was the more likely scenario(minor rev). 39 was forming, and it moved fast to the 1R. It pulled back 70-75% of the bar size, and I thought that was a sign of weakness. My thoughts then were trend CH line overshoot and expanding triangle behavior, the market maybe is looking for a third point. At that point, I wasn't really sure if I could hold for a test all the way down due to my stop being tight, and I used a default exit, the bare minimum, which still gives me a positive trader's equation. After seeing 39 PB that much, i also thought TL break on some lower TF. Possibly a test back down, and then maybe an attempt at a rev back up. I don't want to find out how the bar is going to close so i am going to exit. I don't risk a PB back to my stop and exit early. In hindsight, i think it was reasonable too to hold for a test back to the bottom since the magnet was so close. Also, my emotions did play a part in my trade management at that moment and made me resort to a default target.
Is that a healthy approach to trade management? Was my management good enough even though I included emotions in my decision-making? I think it is, but what's your opinion? I would be more than happy to know. Sorry for writing that much, thanks for taking the time responding in the first place. Much love<3
Trading is very difficult, and is often made even more so by individuals who "need to know" what is going to happen next. But here is the answer, you NEVER, EVER, EVER, KNOW. And that is the point. Because when one does "know", that is wrong, and one will position size incorrectly. It is simply a time bomb waiting to happen. . .
Not knowing is actually a benefit. It keeps "everything in line", including the stop placement. Not knowing is how the probabilities play out.
The quickest way to learn will be as follows in my opinion:
1. Never use real money. Buy a $30 prop account if you need to be "in the market". Note, there is never a reason to "be in the market" until an edge is present.
2. Evaluate trades and take them based on your plan and potential edge. Place your target and stops (1:1) is recommended if scalping. If scalping and you are better than 50% ----> you are profitable. That is 50/50 odds. However, more importantly is to observe the market as the trade plays through. Do not touch anything. Watch, observe, learn and after 20-50 iterations (single iterations) evaluate.
3. By not touching anything you can begin to see why "knowing" is never part of the plan. Trading is about managing risk and using an edge. However, first one needs to test sufficiently to see if one actually has an edge. Moving targets and stops obscures the learning process in favor of having to be "right". But that isn't what this game is.
4. Losing may be painful. Very painful. However, by working through this process you will learn how the market moves without having to "guess what will happen next". You will also learn that it is ok to not be right and to lose (this is very, very important and if you are super smart, very, very hard).
5. Analyze your selections against Al's daily marked up chart (a free and OMG such an undervalued resource). Keep track of the statistics of matches and figure out your gaps. That is where the learning is built or reinforced. Al's markings are absolutely right and are based on his decades of observing the market.
Over time you will see how higher probability plays out, and learn to recognize MTRs and wedges with more confidence. Swing trading requires a swing stop. You used a scalp stop but were swinging. This can cause issues in the future and is part of the "having to be right".
With that confidence and testing, you may adjust your plan more in real time, but that puts much more pressure on performance. Stronger is to analyze for edge, place targets, watch and analyze after a good series of events. This is the work that works. It also removes the stress of "having to know".
It is the short path. There isn't an easy path.
Good trades to you!
* referring to the graphic, the lower 1/3 of the large bars are outlined. This is because Big Down -> Big Up -> Big Confusion ------> TRADING RANGE BEHAVIOR. In the lower third of trading ranges, buyers often lay future orders. Matrix Oracle Reference To Cookie Scene. Now did the market react there because of the box and if it wasn't there, would it have done something different? Dig out many charts :).
https://www.youtube.com/watch?v=qdza9z2nin4
Mark Douglas:
The patterns repeat themselves with statistical reliability. The outcomes that the patterns are predicting are random.
It pleases me to see another Tom Hougaard enjoyer 🤣 . I am familiar with Tom's work. He is the reason why I am here. I found out about Al because of him. I try my best to implement his teachings real-time. Tom has been a massive help on my trading journey, and I'll always be grateful for his work and his generosity. Also, I've got a PDF to share, I don't want my response to be huge again.
Tom shared a speech from a legendary bond trader in the 90s. I'll share the link just in case you've missed it(i am assuming you're in his telegram group) and for anybody else who wishes to listen to.
https://www.youtube.com/watch?v=ffEPqLIBnkM&t=2947s&pp=ygUUY2hhcmxpZSBkZSBmcmFuY2VzY2E%3D
Quality is bad but it is watchable.
