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Ok so attached here is the current chart of the ES futures as it stands at this point in the day. I logged on late today and saw we had a pretty strong breakout going. I bought 2 lots at the first green arrow with a stop order. Typically, this is much later than I would get in, but the sharp rally and favorable bullish price action from the open told me that we should expect a second leg higher.
So it then goes up and tests Monday's high, puts in a doji and then a couple of bear bars. I say to myself "it's fine, this thing is just pulling back in a bull flag building energy to break through resistance". Then we get H1, L2, H2... you know all the usual stuff. H2 fails and we get an L3, but I notice it's a wedge that spiked the 50% retrace and put in a tail, so I say, "hey I'm going to buy an extra lot here and try to get out at break even" so I buy 1 at second green arrow. That starts to look like it's going to work, then eventually that fails as well and I get out with a loss on all 3 lots at the red arrow recognizing that this is an endless pullback (right about 20 candles).
So I guess I'm looking for some feedback here. This is one of the biggest challenges I find is deciding when to bail on a trade early and when to give it breathing room. I don't think I did anything egregiously wrong here, but I did take a winning trade and close it out as a losing trade, and that's something that never feels great. So when would you have bailed on this trade? How would you have handled it?
Yeah, we've all been there.
So I bailed at 3975, bar 14. Why? MM based on the size of bar 4, close of bar 81 on Monday, and this actually was leg 2.
If you notice yourself getting in late, then you're waiting for higher probability, which is scalp mode, not swing mode. So bar size is about 10 - 15 pts, get out with 5 to 7 pts.
Also, note how weak the bounce off the ema was, a classic sign the market does not consider it support.
Side note.
Become an expert on a setup, ie. 2nd entry pullback to ema.
The market gives info when they probably will work and when they won't.
Bars 17 thru 21 are loaded with info. Notice bar 22 went 1 tick higher (MES) than bar 19, trapping stop entry buyers. It was also about a 50% pullback of 14 - 19. Three bars later, it slices through the ema.
That is helpful. I don't normally buy in that late in a move, but I just happened to log in at that time and that was where the market was at. I probably should have been more patient and waited for a pullback since I don't typically like to scalp unless I have no other choice. I also did not notice the MM you highlighted, so that's helpful. If I would have considered that as well perhaps I would have gotten out earlier. Really even if I got out at the close of that 2nd bear bar I would have escaped with a slight gain and could have been looking for new setups. I could have always gotten back in. Getting stuck in endless pullbacks is the worst, as they just slowly grind away at your position forever.
Side note.
Become an expert on a setup, ie. 2nd entry pullback to ema.
The market gives info when they probably will work and when they won't.
Bars 17 thru 21 are loaded with info. Notice bar 22 went 1 tick higher (MES) than bar 19, trapping stop entry buyers. It was also about a 50% pullback of 14 - 19. Three bars later, it slices through the ema.
I see what you mean. I did not notice all of that info, but with your description I can see that. It is sometimes difficult to spot all of the little details, especially in real time. Thank you, your replies have been helpful.
Let's look at the positives in your trade.
Your radar noticed a breakout and you knew it had a high probability of making money.
You entered, but need to manage the trade as a high probability trade, which means scalp.
So good job on the entry and the market is letting you know where more work is required.
There was a clear wedge top at a significant resistance level. You missed that. It's fine, you can implement rules on how to handle when you miss things like that. Watch the videos on managing losses in the 2nd part of the course. They cover this.
Also, you booted up your trade software, and saw a strong BO going, so you jumped in. Did you have a plan to take profits as you did? I feel like you didn't, or you would've known about the wedge and resistance level. When I boot up my NinjaTrader and see a strong trend going, I feel like I missed the first trade of the day. Sucks to be me, but rather than then buy the high. Every trade you take should have a determined profit target and stop loss, and a plan when to get out if things go south.
Also, you say you don't usually do this, since you don't like you scalp, but you didn't take scalp profits when the market gave them to you. Watch video 31D about that.
