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Today was a struggle day for me on the ES. 06-11-20 Thursday. These trending days show me the areas that need improvement. Today, I kept taking what I thought looked like valid momentum reversal setups but they were just pullbacks on this strong downtrend. So rather than go with the flow of the market, I sit and wait for what looks like another valid setup in the opposite direction only to be repeatedly stopped out. I think what is preventing me from taking these shorts is that I’d be taking them into the lows of the day. I need to work on turning my perspective around when it comes to this.
Any advice on helping me turn my thinking around for bull/bear trend trading will be greatly appreciated!
Don't blame yourself much, days like today are rare and when they come we are not ready to change our mind quickly. Also, the reason why the trend goes that far is because the short entries are weak or scary and traders have to chase the market down, and there are also some more or less compeling bottoms that continue to fail, propeling the sell-off. In days like this, I am happy if I don't lose money because one mistake with big bars like today gives you a good hit.
Before the wedge failed at 22, the day could have been a TTRD. After that became crazy and it is better to not trade. So here my advice: Watch and wait for the next day, which probably will be a profit taking day and have easier setups.
Maybe this advice is not what you were hoping to get. If this is the case, remember what Al constantly says: we are here not to take trades but to make money. So when a situation is beyond our knowledge we just need to step back and wait.
This is what I did yesterday and I didn't lose money, tho I was caught below 22. I allowed to happen to me only once, then I just watched and learnt instead of giving all my weekly gains back taking trades at the low with huge risk I was not confortable with...
Hi John,
Your goal is to trade profitably the strongest type of trend in the direction of trend. But, in my opinion, traders need two things before that.
1) Traders have to be able to identify the trend in real time when the strongest type of trend is developing in front of them. The knowledge of Small Pullback Trend is very helpful for traders to do this. To trade Small Pullback Trend profitably is another matter, but just identifying it in real time is not so difficult after traders experience it in real market several times.
2) Traders need discipline not to expect immediate trend reversal from the strongest type of trend. Once the strongest type of trend comes, probability of immediate trend reversal is very low, so betting on that is a losing strategy. But, when it is developing in real time, Small Pullback Trend often looks like just a swing in trading range and keeps generating reversal setups all day long, so traders need discipline not to take them in the hope of trend reversal. With the knowledge of Small Pullback Trend and with enough discipline, I think, traders can save a lot of money in the long run.
Your thoughts on where the top/bottom is are just suppositions until you have objective support from actual price action. When the market tells you something else clearly, even if you can hardly believe it, it is better to trust price action which is developing in front of you. In my experience, Small Pullback Trends often happen when/where it seems unlikely that they happen. So, in my opinion, traders have to be able to trade current price action without any preconceptions to trade profitably the strongest type of trend in the direction of trend. But it is usually not as easy as above 1) or 2).
