Session
System: If 3/3 Internals trend together, Then trade in that direction
- Clear huge downtrends on VOLD ADD then later on Weight dropped but as this week is a macro week and not an earnings week, I am more focused on ADD and VOLD as these 2 will tell much more of the story compared to Weight
Trade 1-3: These are all shorts anticipating a breakdown in ES because VOLD ADD both were moving very strongly lower nearly immediately at the open. Something I shouldve done after the first loss was take a step back and find the most likely liquidity draw.
- As you can see here we have the intraday high from friday acting as the resistance on the day. I was shorting into that resistance even though I shouldve expected us to do a liquidity grab at that level. I couldve easily avoided the 2nd and 3rd losses had I just sat back and been more patient. I also couldve possibly held the winner much longer if I wasnt losing that much that early on.
Trade #4: This was the money maker in which I was short and got about 5 points but I failed to identify that this was an A+ Setup and A+ scenario.
What makes this trade an A+ trade?
1. VOLD ADD moving down very strongly at open. VOLD opened at +8 and was already down to +4 within the first 20 minutes. That is extreme delta divergence given ES is breaking out at the same time of us breaking down. ADD was pretty much pure selling once it broke OP. Weight was moving higher until ES broke down in which I expect to happen quite often on a week where macro is in play and not ER.
2. We swipe out a huge LL.
- Fridays intraday HOD was a great place to fake out shorts (stops) and to suck in longs (fomo buyers) this is the most likely spot where a flip in price action can occur
3. 3 bar reversal on 5m at the break of fridays HOD.
4. The breakdown after 3 bar reversal was the largest volume candle of the day
5. The reversal occurred exactly at 10:00am
6. Approaching 1ATR after large premarket move higher
7. TICK was also trending lower immediately after the open printed the highest TICK of the day
How should I have traded this?
Entries:
E1: first sign of failure above the Friday HOD, First 2m red candle to break previous 2m candle low
E2: Add once we break the 2m candle low from the first entry candle
E3: Add 1 more time on IR entry
Targets:
T1: First change of character I take off 1 contract
T2: Second change of character I take off 2nd contract
T3: Full reversal (break below intraday open price) 3rd contract.
Stop: HOD
Had I taken this trade exactly this way my risk would be about $450 and my potential reward if I took each contract at each target would be $1500 exactly.
Other ways to trade this: If its an A+ Setup then I should have an aggressive target which is full reversal. If that was the way I traded this it would look more like this.
Same entries but instead of taking partials at passive targets I hold full position for agressive target or B/E. Trades like this I dont enjoy because I have had so many of them come back and hit my stop when I was already up a very large amount. I think anytime I get above about 10 points in profits, if we break the previous 2m candle high I should just get out. If I was trading "perfectly" though I would trade this setup exactly how its posted above. 3 entries at HOD with target at OP. Had I done it this way instead I would have risked about same thing as $450 but my reward wouldve been 14 points with 3ES which is $2100 instead of $1500 in the previous scenario.
Takeaways:
- In A+ Scenarios I need to be pushing size and pushing targets a little bit more than normal. Doesnt mean I cant take some partials along the way as I get better at trading A+ scenarios but I definitely should not only be up $100 today as I nailed the right trade but failed to identify that it was an A+ scenario and I should have been either holding at minimum and adding for larger targets at maximum. This full DRC will be posted in a new document where I will only post A+ scenario trades within the strategy so I can possible identify them more accurately next time.
