Here is a FAZ trade currently. Stop was set .01 under previous candle low for .09 risk on the trade.
Conventional trading wisdom says catching this formation is dangerous. But since the information displayed is only information it must be your mind , attitude that make it dangerous. I saw the momentum change so I made this trade. If market sentiment has changed I will have gotten a huge time advantage. If not, I'll still have time to take .25 or so from the trade. The next few candles will tell.
The market doesn't care how much risk you take on as far as stops are concerned. It will do as it will do. Using momentum to set the stops instead of an arbitrary level in the distance past can help you experience pressure free trading. Pressure free trading occurs when the trade moves quickly in the opposite direction of your stop.
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3 comments:
It's insightful that you have an idea of where you think your prfit might be before or just as you enter the trade here. "...if not, I'll still have time to take .25 or so from the trade. The next few candles will tell." Your experience has allowed you to project exit probabliities of trades well in advance, it seems. Your entry was long at 21.75 so a .25 gain would mean you sensea probability of stall or reversal at $22 even... which makes sense, given the doji parked there just a few candles back.
Is this a misunderstanding on my part? If not a misunderstanding, this is very interesting and will be something I'll give closer attention in the future.
Awesome posts here, Scott. Thanks.
well in this case I was writing it as I was trading it and could see what was happening and where it was. Typically I NEVER set profit goals
ahhh, ok. I got it. Thanks. It was a good post... and a good trade.
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