I would like to share some insight into our trade entry parameters. First, we determine trend. Second, we establish fundamental and technical reasons for the trend. Third, we establish the strength of the trend and level of noise in the market. Third, we look for trade setups with multiple confirming signals on various charts.
Later, I will share a losing trade that we took yesterday and reasons why we should have no been in it in the first place plus reasons why we managed it poorly and allowed for a full stop. I will also discuss how the trade should have been managed if you happened to take the signal given on one chart but no confirming signals from any other.
Trade Entry- Pullback trade- Lesson 1:
- We enter in direction of the trend.
- We wait for confirming signals, ignoring counter trend signals and single short-term chart signals. We wait for confirmations on multiple charts before entering the pullback trade.
As you can see, we had multiple buy signals on all three charts. Some of the signals occurred on one chart but not on the others, these entries would not be taken. Also, you notice that you get an initial signal on a chart, followed by another chart, and then confirmed with the final. These are the types of trades we are looking for. So, even though we had multiple signals, we are looking to enter into the higher probability positions to allow us not to take full stops.
We set our maximum initial stop at 16 ticks on the NQ. If we are about to enter the confirmed signal and have a stop at say 12 ticks, this is looked upon as great risk reduction. I will discuss our stop management in a different post.
Let me know if you have any questions!
HT
Got to the screens late in the afternoon today, plus I usually don't trade Fridays; I do most of my analysis on Fridays. So, I was only able to take the buy signal shown on the chart with entry and exit prices.
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