Stumped on this trade

[ahwilliams30]

I'm not sure if I should be asking questions about individual trades here but I'm pretty stumped on this one. I can think of some negatives but nothing super substantial to keep me out.

[eiketre]

I believe this is the same position.
I got trapped here

long.png (110.38 KiB) Viewed 3250 times

[eric-pal]

One of the aspects as one dives more into momentum, is beginning to see how prices are supported, or not. With strong moves, you will want to have a 2nd entry to ensure that the opposing force has been dissipated.

With the strong move off of the bottom, as well as reading market state, there is the potential for an upwards move. However, and entry there with the previous bar isn't indicating imminent continuation.

Hopefully helpful and good trades to you!

[ahwilliams30]

Hmm okay - I think what you're saying is that the big bearish bar changes the momentum so it no longer looks like dissipation of the bearish momentum but rather bears gaining momentum, defeating the purpose of second entries, but correct me if my interpretation is wrong

[eric-pal]

Correct. It isn't just about count. Counting only provides an edge with respect to context. The first entry showed a lot of weakness, followed by a strong bear bar. All of this is still potentially within the downward channel.

That bear bar is 4 points.

From Mark Douglas: The most important belief when trading is. . . . Anything can happen. After that bear bar, you will definitely want to be very certain.

It might be interesting to compare and contrast that trade against Taylor's trade from today:
https://www.youtube.com/watch?v=AWwGqscnz3g

Hopefully helpful and good trades to you!

[chompsky]

I believe that UT has an OS. I typically respect OS and do not take 2EL at EMA if it just came off OS as prices can straight up reverse here. Without OS this setup looks decent, although the bearish bar was rather big vs the 2EL bar.

[mwilson0909]

Question for Eric or Taylor regarding the trade Taylor took in the video above on 11/17?
I noticed that you took a visual 2nd Entry long where the break and new high actually exceeded the high from the channel. The tail made the new high, but the body closed below the high. I've always ignored these type of 2nd entries when a new high is made. Do you consider these high probability 2nd entries....and does it make a difference whether it is the body or tail that exceeds the prior swing high?
Thanks.

[eric-pal]

There are a variety of factors that play into determining whether a particular trade has sufficient edge. It isn't simply one factor. Ideally you will want as many in your favor as possible (which usually improves the probability).

Other aspects that may be included are bias, support or resistance, channel structure, counting [when appropriate], price flow . . . [noted a limited listing]. Keep in mind that this is a story which is unfolding, and you are working to understand the picture. Specific "punctuation" plays a part in formulating the overall biases and plan.

Part of this also becomes working through sufficient examples to become familiar with what you not only can identify as a high probability setup, but also one that you can take. With experience you recognize both the probabilities of the variety of trades, as well as the range in which you can operate well - since there isn't always a 1:1 overlap between those aspects. One with this knowledge, you can formulate specifically those trades that are worth trading and executing for you.

Hopefully helpful and good trades to you.

[Taylor]

Thank you for the response Eric! It becomes evaluating all aspects for the edge and that can be a lot more nuanced than a rigid count or structured rules like a break and new extreme. You can hear my my initial hesitancy in the video however because of the aforementioned points. I really had to trust my intuition on that trade.
On the first trade in question, that little body signal bar with a huge setup bar is enough for me to avoid since there seems to be some bearish momentum that has not dissipated.

[raymond]

Hi Taylor,

In the video at around 14 seconds, you mentioned that technically we made a new high but notice how the body is below the high of the micro uptrend... how did this affect your read and what doea that mean? I've been trying to figure it out but finally have to ask because it's affecting me when I review charts and see something similar.

Edit: My brain keeps saying that scenario may be a hidden 2E? I want to throw out that idea completely if I am wrong.

Thanks,
Raymond