8/10/23 Failed Trade

[ahwilliams30]

I took this yellow arrow trade today as a second entry short off the EMA with some strong down momentum looking for a retest of the lows. I was stopped out on the engulfing bar before prices moved lower. It looks like a pretty good trade to me - should I have moved my stop to the next swing high like Mack recommends? I've been hesitant to do this as it can increase risk significantly.

[shoikan]

I'm still a trading novice but from glancing at the chart below I see:

-strong bullish leg, would be expecting a second
-until I saw a break/new high I would personally be cautious
-if I were to jump in on that specific situation I would be interested in a long trap (2el) under the EMA
-it also looks like where you entered was about 50% retracement on the previous bullish leg
-it looks like some indecision at the 50% retracement level which makes it look a bit sideways (two doji's in a row)

I personally don't trade failures so for me there is nothing to do.

[eric-pal]

The way which was traded was as a trap and the stop should have been to the beginning of the leg down and not where it was placed. All trades need to be managed with the same risk so that all trades, regardless of signal bar size, are managed the same. Thus a trade is simply a trade.

Please note that you should have been expecting another leg up based on the 6 consecutive bull bars.

Kudos as the downward direction was still the higher probability trade, it simply was early based on how prices were moving (at least statically).

Hopefully helpful and good trades to you!