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This is how NOT to make money buying in a bear trend. I know it is very difficult, and you should not even try it. Yet here I am trying it, again... I actually had a bearish bias going into the day. In my pre-market routine I noted the bear doji daily bar from 3/26 looked like bulls buying lower and pushing the market back up just to exit and once it re-traced back to that point again I thought there would be more sellers. And there were... but my mistake is thinking they would get tired and want a pullback. Makes sense to me, so shouldn't it happen? Yea, maybe it should, but does that mean it will. No. And does that mean I should structure a trade because I think that's what will happen. No, again.
I started buying near the B12 low and took mostly scalps to the upside and it was working a bit. But rather than put a stop below B19 I kept scaling in. I did measure the double top from B15 and B25/26 and put more buy orders around that MM which was near low of B44. Ended up making a bit back scalping there for a few hours. But carrying the loss from those buys above B19 cost me. Anyways, just really putting this here to get it out of my system and remind myself that even if I could make money buying in a bear trend, it is very difficult so why suffer through it? Just be smart and diagnose it as bear spike and channel and trade it as such.
The good news is I was trading micros so I didn't blow this account, just ate up a lot of the cushion I had built up. Other good news is this was not my primary account. In my primary account I actually was relatively smart and sold above B1 for a 9 point scalp then sold close of B7 for another 9 point scalp just under the low of B7. But at that point I was scared to sell more, so when that happens I sometimes turn to these alternate accounts to continue trading but without as much risk and often end up doing silly things.
Open to any constructive feedback.
Hi David: 12 years in here and I used to be like you in the early few years always looking for the reversal on a day like today but over time I've made the entries as low stress and quick in and out as possible. Buys on a day like today, even if they ultimately work, are not likely to be quick. They are gonna take a while...minutes while you keep rooting it on to go up. It burns too much "emotional capital" for the little reward you can expect. Al says somewhere I can't remember if it was in the books or the videos, "Don't trade countertrend until you have broken a significant trendline". No significant trendline was broken today so that one rule would have kept you out of buys. I only took one on the initial surge down (too fast and risk is big). Bar 26 L2 was the 2nd trade which was the point that it got into my comfort zone. Oscillating some and not too fast and straight down. I just waited for micro double tops, L2s (preferably close to EMA), EMA fades, "Mini" Head and Shoulders and wedge pullbacks to the EMA for a continuation down for sells. They went quickly just like I like so little emotional capital used.
thank you for the response, yes that is good reminder to not even look for long until trend line break. I also hear several times "if no bull has made money yet, do you really want to be the first" and it is very true. Yet the temptation remains. Hopefully I will re-read responses such as this over and over so that I am able to dismiss that silly temptation.
Good information within the threads, and I want to emphasize something which may provide additional study aspects. Review the chart again. In doing so, yes, observe a major trendline isn't broken yet, so no reason to go long. However, it is easy to overlook a few critical things: 1. What is your directional bias? This alone should result in reviewing any trade. Unless a trading range, being long under the ema is generally difficult. 2. If there is a directional bias, please review Al's always in directional emphasis - you will want to take trades in that direction (which can be different than the longer term bias but will also provide feedback on when a reversal trade may work -> please note this really shouldn't be done until profitable. 3. And probably the most important aspect. The behavioral aspect to go long underlies a perceptual bias fault. The reason it is appealing is because the risk appears small, and the reward is HUGE. While both of these aspects ARE TRUE, what is missing is that the probability is also small. Until aspects of 1 and 2 are satisfied, the probability IS SMALL. Reviewing many charts and decision may help to emphasize and allow for attribution of probability assessment. And this really is the key, because with this foundation, everything else becomes much, much easier (but it can take time).
Good trades to you!
Since you traded quite nicely in your main account, this is not a skill problem, it is a psychological issue. Trading "to trade" is one of the biggest reasons for losing money. You need to break that dependency on being active in the market too much. Trading is like hunting. You need to wait around, sometimes for long periods, in order to stalk the setups where the Trader's Equation gives you an edge. David's advice is excellent, I would just add trading requires you to become comfortable with being uncomfortable. Don't give in to irrational fear OR greed, know when the price action is telling you it is time to be in the market or out. Good luck!
thank you, this is very good advice. you are right that it is a psychology issue and it is harder to overcome than I would like to admit. I like the hunting analogy. It is similar to a comment Brad made in the trade room a few weeks ago saying pretend you are standing atop the white house and have one bullet with which to defend against any intruders. you need to make that count. make your trading entries with the same, being patient and not wasting them before the right time.
