Key Takeaways from Today's Losing Trading Day

Trading Rule: Bearish Data Drop Confirmation with Retest Verification

Rule Overview: To confirm a bearish market reaction following a significant negative economic data release, ensure that the data drop open price is tested and confirmed on the 15-minute chart before executing trades.

Rule Details:

1. Identify Bearish Data Release:

   • Trigger Event: Detect a significant negative economic data release, such as a large drop in factory orders or other key indicators.
   • Threshold: The decline should be notably worse than market expectations, typically a drop of 3% or more compared to a prior positive trend or consensus forecast.

2. Initial Price Reaction:

   • Open Price Impact: Observe the market's initial reaction to the data release. Note the price level where the data release impact causes a sharp drop.

3. Check 15-Minute Chart Confirmation:

   • Retest Observation: After the initial drop, monitor the 15-minute chart to see if the price retests the open price level where the drop occurred.
   • Retest Confirmation Criteria: For a valid confirmation:
     • Sustained Bearish Trend: Ensure that the retest of the open price is followed by a sustained downward movement.
     • Break of Retest: The price should fail to hold at or above the retest level, showing a clear rejection of higher prices.
     • Volume Confirmation: Look for increased trading volume during the retest and subsequent decline to support the bearish sentiment.

4. Execute Trade:

   • Short Position: If the 15-minute chart confirms the bearish sentiment through sustained downtrend and failed retest, consider entering a short position or trading in line with the bearish outlook.
   • Stop-Loss and Targets: Set appropriate stop-loss levels to manage risk, and define profit targets based on technical analysis from the 15-minute chart.

5. Review and Adjust:

   • Post-Trade Monitoring: Continuously monitor the 15-minute chart after entering the trade to ensure the bearish trend persists and adjust if necessary.
   • Adapt Strategy: Be ready to modify your trading strategy if market conditions change or if new data releases alter the bearish outlook.

Example Scenario:

• Data Release: Factory Orders data shows a -3.3% decline vs. a -3.0% consensus.
• Initial Impact: The price drops sharply following the data release.
• 15-Minute Chart Analysis: Observe the price retesting the drop open price level. Confirm that the price fails to stay above this level, showing a sustained bearish trend with increased volume.
• Action: Enter a short position based on the confirmed bearish sentiment from the 15-minute chart.

This updated rule ensures that you not only respond to significant bearish data but also confirm the market’s continued bearish outlook through price action and retest verification on a shorter time frame.

1. Premarket Analysis and Entry Decision:

   • Arrived slightly late, catching the bearish Jobs Report data drop.
   • Identified a major decision level, with the market sitting at the final support above a major swing low.
   • Chose the bullish order block with confluence between the H1 and M30 charts.
   • Plan to go long above 18745.50 if the market holds the swing low into the open.
   • Recognized the risk of the trade weakening if the swing low was swept.

2. Initial Long Trade Execution:

   • Entered long but got faked out.
   • Followed the plan and rules despite a significant loss due to high volatility and large stop loss.
   • Encountered a larger loss than usual, impacting the week's overall performance.

3. Trade Analysis and Reflection:

   • Used custom timeframes instead of default timeframes for technical analysis, leading to potential misalignment.
   • The bearish interpretation of the 8:30 data drop acted as a break and retest short entry at VWAP.
   • Extreme volatility led to a large stop loss, resulting in a significant drawdown.
   • Plan to develop a new trading rule to account for data interpretation drops acting as break and retest areas.

4. LIS and Trend Considerations:

   • Attempted a counter-trend trade despite the LIS downtrending.
   • Previous experience with an H6 trend shift against LIS influenced decision-making.
   • Need to wait for a trend shift on the H6 chart to potentially invalidate the LIS in future trades.

5. Monthly Chart and Premarket Insight:

   • Monthly chart began a bearish trend after the overnight draw on liquidity.
   • Trusted a deep swing low outside the default timeframe range, which proved unreliable.
   • Recognized that bullish order flow might not step in until at least 1 PM, but the long entry didn't reverse the trend.

6. Subsequent Trades and Adaptation:

   • Took another loss on a 1-minute chart trade, immediately re-entered, attempting to adapt to a bearish data interpretation setup.
   • Encountered another stop out, indicating market manipulation and volatility.
   • Felt the market was in a "rob your money mode," leading to frustration and the need to step away.

Summary of Lessons and Areas for Improvement

1. Time Management:

   • Ensure timely arrival to the trading desk to allow sufficient premarket analysis.

2. Timeframe Consistency:

   • Stick to default timeframes for technical analysis to avoid misalignment and unreliable setups.

3. Data Interpretation:

   • Recognize the potential for data drops to act as break and retest areas, and adjust strategies accordingly.

4. Trend and LIS Consideration:

   • Avoid counter-trend trades unless there is a clear trend shift on higher timeframes (e.g., H6 chart).

5. Volatility and Risk Management:

   • Be cautious with high volatility periods to avoid excessively large stop losses and significant drawdowns.

6. Emotional Control and Adaptation:

   • Maintain emotional discipline and avoid frustration-driven trades.
   • Develop and adhere to new trading rules based on recent experiences and analysis.

By reflecting on these takeaways, you can refine your trading strategies, enhance your decision-making processes, and improve overall trading performance.

(PREMARKET)

8:53AM. Got to the computer slightly late today. But its okay. I was able to catch the recent data drop (Jobs Report) at 8:30AM. Which came as a bearish interpretation.

The market is currently at a crucial spot at a major decision level. Its currently sitting at what I believe to be the final support level in the market above a major swing low. The Bullish Orderblock I have sitting above the currently swing low, has confluence between the H1 and M30 charts. So I decided to keep that as my level. There was a major flush after the data drop. And the market is below the VWAP on the 1D chart. And also has an extremity on the 5D 5M WEEK VWAP. And seems to have confluence with an H1 to M30 hold, currently sitting above the 18745.50 level. That level aligns with the VWAP on the 1D Chart. Aligns with the price action reaction for my bullish orderblock, and also aligns with a reacapture of the lower VWAP Band extremity on the 5D 5M WEEK VWAP. Lastly, a recapture of the 8:30 data drop. 

That is my current gut feeling to take the market long above 18745.50 if the market can hold the swing low into the open

If it runs the swing low SSL, it makes the trade less of a strong signal in my opinion. 

10:06AM: Got faked out long. Ending the week red.

Followed my plan, the entry required a retarted amount of risk on a simple 5 minute candle. Pretty redicules.

I followed my plan, it was fully triggered. Followed every single rule, yet still, I got fucked. 

I think if theres any chance for this market to bounce, it will be around 1PM orderflow. 

I had to take a 1 and done trade today, because the stoploss was so big on the M5 entry, that I can keep rolling the dice. Usually I can stop out of a trade with max $100 dollar loss. But again, because of this volatlity, a single 1 trade 5 minute stoploss resulted in a $362 loss, nearly taking away all of the gains from yesterday. 

Had I not taken such a massive $600 loss the other day, I probably would have ended the first week green. But i have to do everything in my power to make sure that I make it to the payout. Everything is on the line. And im doing everything in my power to make it happen. 

I will end week 1 of my performance account, down $212.84

Its not the end of the world, I still have 2054 left in trailing drawdown. 

(How Could I Have Avoided This Loss)

- I think one of the ways is that, when I was doing technical analysis into the most recent swing low, I was using custom timeframes, instead of the default timeframes. And this swing low, would have needed at least 180D 4H timeframe for confirmation, but I went into the H1 and M30 untapped orderblocks to see if there could be a deep retracement into the swing low. I figured since the draw on liquidity was already swept in the premarket session, and because the swing low was still intact, that if the market V shaped, as it did, then it would result in a green trade

- The 8:30 data drop had a bearish interpretation. 

Although i really do feel robbed on this trade, because I set my entry at what I believed was full confirmation, for a reversal of the data drop. The data drop actually held as a break and retest short entry at the VWAP, at the exact moment where I went long.

And because of the extreme volatility in the markets, my 5 minute candle entry, was literally a 200 point stop, over the top risk. But it moved up so quickly and decisively, and closed outside the extremity range lowerband on the 5D 5M WEEK VWAP, that i really anticipated a higher move. For now I will have to wait for the ending of the trading session to see where the trade of the day was and how I could have spotted it. As of now, it feels I got long at the short entry trade of the day.

But even when analyzing that short, I dont see how I could have capitalized on it other than waiting for the bullish to bearish variation on the 1 Minute chart, as a price action reaction to where the trade signaled that I should get long. The move feels manipulated at the moment. 

Overall, I will have to develop a new trading rule based off of this concept of bearish or bullish data interpretation drops.

That they can act as break and retest areas, rather than A side trend setups depending on the interpretation

- The LIS was still downtrending. So it was a counter trend trade.

This was difficult for me to trust, because yesterday, the LIS was uptrending, yet there was an H6 trend shift against the LIS, which resulted in a green trade for me, because I stayed with the orderflow of the H6 trend instead. 

What I did wrong today was, not waiting for the trend shift on the H6 chart, to potentially invalidate the LIS. So, I will have to develop a new trading rule off of this concept to avoid losses again in the future. 

- The Monthly Chart began a bearish trend at the break of the draw on liquidity from the overnight.

This one is also tricky, because although the draw on liquidity was reached in the overnight, the deep swing low was still intact which I trusted. But again, I probably shouldnt have trusted it because it was outside of the default timeframe range. 

- The Premarket suggested that bullish orderflow wouldnt step in until at least 1PM

Again, tricky. I thought my long entry could reverse it. But it didnt. And its probably because the H6 trend didnt reverse into the LIS. 

11:45AM: Just took another loss, immediate stopout on 1 Minute Chart. I immediately re entered (11:49AM)

This is a bearish data interpretation, Break & Retest, 1D VWAP short setup, the same that was presented at the open.

The trade I got faked out on, on the open, was this same setup, so I guess I will play the opposite side and take the trade that stopped me out. If it doesnt work, that would mean I have been faked out both ways, and taking a setup that resulted in a loss before. Theres simply nothing I can do if it doesnt work. I am trying to adapt.

11:58AM: stopped out.

Now the trade I took in the morning is working, break of the extremity on the M5 chart. With the M5 staying intact, and the M1 stopout at the VWAP bullish to bearish variation. I seriously have to step away. The market is literally in rob your money mode. Criminal activity taking place.