[jonbig04]

Bah.

You're right.

OK, I'll come up with solid B/E rules before Monday.

[atto]

Take from this what you will...

Since you've switched to trading patterns (with confirmation), you're entering later in the move and on a breakout. I'm assuming you got the 910 level from price action on 6/19-6/20, which also came into play yesterday (6/25).

So, correct me if I'm mistaken, your setup is taking breakouts of S/R after a chart pattern, such as a double top. The double top occurred, as price congested between the 918 level and 910. If you entered at the top, you'd have the most information risk (ie, you have little to no confirmation), but your price risk is the smallest. Assuming a good fill, your stop loss is simply the buffer you want past the top in case the squiggles test a tick or couple higher.

Notice that yesterday, price found demand right above 910, and later tested a little below that (909.50). So, heading into today, that whole zone is a possible area of support. Sure enough, ES found demand again at 910.50 (09:33 edt) and again at 909.75 (10:15 edt).

If you want to enter on the breakout of this larger congestion area, you want price to leave this support zone completely. However, your entry was smack in the middle of support, and (as it appears on your chart) on a small pullback. How it played out was that price peaked slightly out, didn't find the supply to keep it down there, and returned to the congestion (value). You were going short when the stronger hands were buying. Retrospect, I know, but read on.

Additionally, since you're trading the breakout, you really don't have S/R to protect you as you did before. Yes, you have a level drawn on the chart, but for your entry to work, that level has to break. If it doesn't, it sure as hell isn't going to protect your short. The purpose of price action based stops is to take you out of the trade once price has passed a "danger point". Unfortunately, breakouts don't have convenient points, so your stop is either fixed (ie, 2 pts) or based on some micro local swing high/low. Notice how price just waddles around the 910.50 area.

This is exactly what I meant earlier when I said that these kinds of trades have more price risk. You have less protection, so either are using sub-par stops locations, or wider stops. Don't get me wrong, I'm not knocking pattern trading, breakouts, or wanting confirmation. I used to trade a lot of breakouts as well, and did so successfully. However, think about exactly what you want to see in a breakout. What are the shorts thinking? What are the longs thinking? When will people start to puke (which, incidentally, is when you'll be cashing in)?

Just some things to think about. Also, make sure your confidence is coming from a strong plan with a bias, and not the idea of patterns. Looking at a couple month's worth of trades wouldn't hurt. If/when you do, don't just see if it works. Look at what happens when it works, and when it doesn't. You'll pick up things, such as the fight the buyers gave right before your entry on the lows (instead of giving up and stopping out, propelling price downward). But first, you'll need a solid plan.

[jonbig04]

Thanks atto. With one excepting I agree completely. I attached a PDF that will hopefully explain my behavior.

[atto]

Makes sense. Please don't interpret my critique as knocking the idea behind it. Sometimes it helps to pay attention to the surrounding area and avoid tunnel vision. Yeah, the traverse down was a down trend, but we're also in a larger congestion area, so your pullback, which normally would have been a good idea, was right into S.

As for the stop... As you probably know, I don't follow ORL or ORH (though they might be wonderful, wouldn't know). My argument is that if ORL/ORH was decent S/R, I'd notice it anyways (as a perfect example, I got the 910 from weeks before, with a test today). Next, you placed your stop assuming the trade would work. But stops are for when they don't . Especially on flips, you want it tested before you could bank on it helping you out. Right when it's being broken (or "fought for"), the whole area is fair game. As for "acceptance", price wasn't rejected (look at the highs and other lows). Sure, they were fighting, but bulls weren't rolling over so quick (which is exactly what you want to see for a breakout).

There's no need to over complicate things, so if none of this resonates with you, save it for a rainy day.

[jonbig04]

Yeah you're right. Thanks for pointing it out, I can see clearly where I messed up. I have to remember to treat those big patterns accordingly.

That's true about ORL and ORH, they simply find and plot the S/R that's already there. It's a shortcut.

[jonbig04]

[jonbig04]

So we broke up, not down. Well I've got plans for that too lol. It would basically be a mirror image of what I was going to do on a break down.

[jonbig04]