Breakouts

Chad Seven said:
Long Natural Gas

View attachment 279680
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Natural gas stopped out for BE. Thoughts to follow.

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In light of today's trading some reflection is in order. The last three trades I have taken I accurately predicted the direction of a decent move only for the profits on all three to evaporate. The three trades reached the below profit prior to reversing:

DAX: £2,200 (2:1)
Bitcoin: £1,500 (1.5:1)
Natural Gas: £1,600 (1.5:1)

That's around £5,000 I let slip away. All three of them reversed at points where I could have predicted they would stall (gaps, resistance, round numbers), and in the case of DAX and NG they price stalled for a while given me time to ponder whether I should close the trade or take some other actions. My previous concern regarding closing trades too early now results in my letting trade after trade close for BE. So what I am to do?

Firstly, is my approach of moving stop to BE a good one? I think so, if only for psychological reasons. Secondly, what are my options regarding trade management where there is resistance between entry and target?
  1. Don't take the trade
  2. Take the trade setting standard target distance of triangle height and set and forget (i.e. stop or target hit, current approach)
  3. Take the trade only if there is sufficient space between entry and problem area to maneuver then:
    1. Observe price behavior close to problem area and if reacting to area close position
    2. Set target just before problem area
I don't like #1 as this will mean few to no trades. #2 strikes me as too simplistic, if it was as easy as set and forget we would all be millionaires. The skill is trading is in managing the trade and money management, well I suspect so anyway. #3.1 makes me feel uncomfortable. How do you know if the price is stalling in preparation for breaching the resistance zone or about to reverse completely? Also this would require I am always present which I cannot be (well maybe I can be available 75% of the time).

#3.2. is also set and forget really, but a bit smarter. My concern is that this will result in a lot of low R:R trades around the 1.5:1 mark. Do I need to set a minimum RR requirement of say 2:1? My win rate is just over 50%. I am not sure this would have made winners of the Bitcoin trade and perhaps not the DAX trade. Would I be happy to take a modest profit on NG out of those? Of course.

Leaning towards #3.2. Or perhaps I shall carry on with what I am doing, for now.

EDIT:
Something I have not mentioned, as I am adverse to it, it partial closure of positions but it is worth consideration. I have been thinking about how I can use options to manage risk, however these are only available to me on a subset of the markets I trade.
 
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Closed Gasoline. Had been stalling for two days and that positon closing for BE would be a confidence blow. I didn't think it was possible to be this disappointed by making £1,600.

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Look where this cheeky Bitcoin trade reversed! they know where I draw my lines, they are watching me.

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EUR/GBP gapped up bigly and was not a situation I felt comfortable with so closed for BE. Am interested to see how this unfolds.

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Often I will look at a position in a certain timeframe and think "very precarious situation", then change to a different timeframe and think "actually this is OK". Same information, different perspective.

For example, I could see a pin bar signalling a likely reversal on the H4, but move to the M15 and see a nice shallow retracement in the process of bottoming out. That may be obvious to most but it is something I am having to get into the habit of doing.
 
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Ripple stopped out for 1 X R. US Oil to BE.

I won't be trading Ripple anymore, spread is way too wide.
 
Events since I last posted:
  • Silver stopped out for more than 1R
  • Opened and closed a Gasoline trade for a profit.

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