Tuesday 21 April 2015

R+0.4: 1 Win, 1 Loss

EU Trade: Shorted at H4 Supply, but wasn't a great pivot high (more counter trend bar)

GU Trade: Shorted at H4 supply, slightly better pivot high?

intro: Placed 3 sell stops this morning,  two triggered, EU and GU. EU got stopped out then went my way,  GU triggered and I took profit before but near target as didn't want to hold over night.

thoughts: just wondering whether the EU H4 supply wasn't quite as strong as the GU level, due to it not being as clear a pivot high. Happy to accept that it was just bad luck/probabilities though.

summary: Again got to say "set and forget" is  much easier psychologically. Guess one danger is wanting to polish your edge too much that it crumbles. 

lesson: 1. you got to swing the bat, to hit the ball. 2. using quality S/D (pivot high/lo) on higher time frames means higher probabilities as levels are clearer for all to see so therefore less exploritory breakouts that can take out stops. 

video: AM prep

3 comments:

  1. Is that supply? Or lack of demand?

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    Replies
    1. Hi John! thanks for the comment....

      I was thinking that the sideways congestion/ consolidation initially looked like supply/ demand equilibrium but when price dropped quite hard, this showed that there was actually far more supply at that level, as such when it returned to it I wanted to short.

      I'm very intrigued by your statement...I can understand the meaning of it (that the drop was caused less by selling and more by lack of buying), but would be lying if I didn't say I'm confused as to why it's important to specify. Could you go a little further in the thought process please..

      Cheers

      George

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    2. If its a lack of demand that caused price to stop moving up, there would be little supply left there. However, if demand was swamped by excessive supply, then there would still be supply left when price returned (i.e. from unfilled orders).

      In practice, I think its hard to really differentiate, but when looking for supply and demand levels, I would certainly want a more aggressive move (i.e. LARGE bar) exiting from the location to truly indicate there may be left over orders there.

      Swing highs and lows are simply that - places where traders could not find trades any further in one direction for whatever reason. They are where stops are hidden and breakout traders trade. The indicate a trend. And for those who need to manufacture supply, the stops of others will help fill their orders, so swing highs break.

      Anyway, just my thoughts, for what they are worth,which who knows how much that is!

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