It's been a few days since my last post...
Let me go back and tell you about my last trade.
The situation I was in could have potentially turned disasterous very quickly but fortunately I came out with a small profit. (see last post)
I have split the trade into four posts to break my thinking down across the time that the trade was open.
The main reason to enter short this market was based on a daily pin bar that occured at a previous support level which had now turned resistance.
However, I was so confident of this trade (mainly because this was where I had predicted the market might turn, even before the rally up to it had begun), that I went short before the close at £3 a point. This was essentially breaking my rules because I like to enter a trade on a break of the pin.
At any rate, on the following open, the market gapped sharply down and I was sitting on significant profit.
After watching the movement on the open, I saw that price was ranging. On the upside it was meeting resistance at a s/r pivot I had already drawn on my chart. On the downside it was putting in some temporary support with a two bar low on the hourly.
So I looked to add to my short on a break of this support - which is exactly what I did when it broke a little later.
As it broke, I doubled my position so I was in the market at £6 a tick.
This was an important deviation from the way I like to pyramid (and which seems to be to the most logical way to pyramid).
That is to say, I should have added a second position when the stops on both would have meant that, if hit, I was still in profit overall.
However, the only place to put a stop on both positions (giving them room to move) that would have met that criteria was underneath the resistance not above it.
Still, I wanted to short the break badly, so I went ahead and sold £3 anyway.
When the trade turned against me, I decided to move the stop on my second position a lot higher (and well out of the way) but put the stop on the initial position, just above the earlier high.
This was stopped out for +12 or £36 leaving me £3 a tick short in the market.
