Refined Key Takeaways and Trading Rules from the Session:

Reflection Note - 8/19/2024 4:21 PM

Observation:
Today was an exceptional trading day with perfect execution, especially in nailing the trade of the day setup during the 9:30 session. However, a significant amount of profit was left on the table towards the upside.

Actionable Insight:
For future sessions, it may be beneficial to revisit and refine strategies for capturing more profit in similar scenarios. This could involve:

• Extended Profit Targets: Considering higher profit targets when market conditions suggest strong continuation, supported by volume and trend strength.
• Trailing Stops: Implementing a more dynamic trailing stop strategy to lock in gains while allowing positions to run further.
• Partial Profit Adjustments: Reassessing the timing and scale of partial profit-taking to maximize the upside potential without prematurely exiting strong moves.

Key Takeaways:

1. Trend and Variation Analysis:

   • A shift from a bullish trend to a bearish trend was observed, triggered by a stop-loss event in the overnight session.
   • Confirmation was obtained that a bullish variation holds more weight than a bearish trend, which influenced the day's trading decisions.

2. First Deviation Moving Average:

   • A loss occurred when trading based on the first deviation moving average against liquidity that had already been swept.
   • This emphasizes the need to avoid trades against liquidity that has already been acted upon.

3. Second Deviation Moving Average:

   • The successful trade was based on the second deviation moving average, which aligned with a 1D 1M lower band and created a strong bullish variation.

4. Market Conditions:

   • No significant market-moving data was available during the session, which required a focus on technical setups rather than fundamental events.

5. Entry and Exit Strategy:

   • The buy stop order was executed at the moment of a bullish variation creation, with zero drawdown experienced and a clear exit strategy based on potential reversal signals.

6. Volume and Liquidity:

   • The market showed no signs of slowing down, with volume continuing to expand, indicating a strong bullish momentum.

Trading Rules:

1. First Deviation Moving Average:

   • Rule: Do not trade the first deviation moving average against liquidity that has already been swept. Only trade it into liquidity that has not yet been swept.
   • Adjustment: This rule may be revised if future data suggests different variables that can influence the probability of success.

2. Extremity Point Trading:

   • Rule: In the absence of clear market data, focus on trading from extremity points rather than following trend moves from the open.

3. Second Deviation Moving Average:

   • Rule: Prioritize trades using the second deviation moving average when it aligns with other technical confluences, such as lower bands and the creation of bullish variations.

4. Data-Driven Decisions:

   • Rule: Continue to rely on data and execute trades based on the setups that present themselves, adjusting strategies as more data becomes available.

5. Partial Profit-Taking:

   • Rule: Take partial profits after significant moves, especially when multiple order blocks suggest a potential reversal, while allowing a portion of the position to run if the market continues to show strength.

This refined summary and the set of trading rules should help guide future sessions and improve decision-making based on the lessons learned today.

It was a great trading day. It started somewhat yesterday in the overnight session for me as I took a long entry off of the first deviation moving average, and was stopped out for a loss at the open of the next H12 candle, that broke the trend from a bullish to bearish trend shift. Thats the exact area I took a stoploss, and it was for a very minimal loss, I think around 8-10 points. The entry was around midnight, and the stoploss was a half hour later. From that point I just went to sleep instead of continuing to trade. From the time the market opened in the overnight session, it trended staight up to what I had marked as the Week and Daily confluence draw on liquidity. And above that draw, I had the prior week draw on liquidty, which is the level I believed we were targeting last week, and it actually happened to be my main target on todays trading session, since it lined up in confluence with the 20D 1H Month VWAP Upperband

I marked the red and green ovals, because from the overnight session, shorts had the trade of the session setup from the short taken from the Weekly and Daily draw on liquidity, and because the price action held the prior H1 ODB and seemed to be shorts take profit, plus the H12 Bullish Variation Line In The Sand was still intact, but at this moment I had no data on whether a bullish h12 variation or a bearish h12 downtrend held more weight, but today I now have confirmation and data to support that a variation holds more weight than a trend, which is what I figured prior to taking my long trade today. 

One thing I did wrong and I guess I will have to avoid again in the future, is that I took a trade based off of the first deviation moving average, which seemed like a good trade at the time because the h12 trend was still bullish and intact at that point, from the low of my entry as a stoploss, at 1 in the morning at the turn of the next 12 hour candle, it stopped me out and shifted into a bearish trend. 

Now im not exactly sure what caused the first deviation moving average long stopout, but my best guess is that It would have been a higher probability trade if I took that long into the weekly and daily draw on liquidity/first take profit rather than taking the long against liquidity that was already swept.

Now the tricky part is that I still had higher draw on liquidity targets above, so whos to say that it couldnt have been the correct long entry?

Overall I will need to gather more data on this in the future on different variables that can affect which moving average may provide a higher probability long entry, but for now I will make my best guess a hard trading rule for the future. And that is, dont trade the first deviation moving average against liquidity that has been swept, and to only trade it into liquidity that has not yet been swept. 

If any data changes this rule in the future we will re adjust. 

So for the 9:30 session, the market opened, and I noticed also that there wasnt any hard market data on the day. There was minor 10AM data, but again, nothing that was market moving. So from this point, obviously we had a contradiction between the H12 bearish trend and the H12 bullish variation, so I knew that I need to take a trade from an extremity point rather that a trend move from the open type scenario. Now at this moment, obviously the trend was still up, because the moving averages have not yet reversed, so I knew that the only entry left for me was the second deviation moving average, so i decided to disregard and remove the study of the first deviation moving average because of the stopout I took in the overnight session. So around 10:21AM, we got a rapid reaction to the downside, which created an extremity/imbalance in price action, and the 1D 1M lowerband was in confluence with the 2nd deviation moving average. From this point, the moving average held, with no closure below, wicked on the 1 minute chart, and I traded it with a buy stop order at the exact moment the bearish to bullish variation was created. From the moment I entered, I experienced zero drawdown, with a fair value gap created and displacement from my entry, which is marked with a hard green box from my entry, and a hard stop at the low created from the imbalance. I took off around 85% after multiple orderblocks showed signs of potential reversal, and because we had a full lowerband to upperband move, so I wanted to take partials. As i sit here and journal this, the market is continuing to rip far beyond my profit targets, now heading into the next daily bearish orderblock and beyond. As it should, because volume is still expanding to the upside on the 20D 1H Month VWAP, and because there is a bunch of un swept liquidity of sell orders. This market doesnt seem to be displaying any signs of slowing down anytime soon. So I will just do what ive been doing, and that simply trading exactly what I see infront of me, relying on the data, and executing on the setups infront of me when I see them.