Ideal Price interactions…
You all might already know by now that I only initiate trades at the significant levels in the direction of my future bias. I didn’t talk about how I find those levels in detail until now. The levels are fixed for BPB, BOF and TST setups. But when it comes to PB and CPB, the level to initiate the trade completely depends on the market trending environment. I choose aggressive levels when the trend is fast-moving. When it is moving with moderate momentum or slow, my choosing of levels will be a bit conservative. So I suggest you look at different trending environment and mark the levels where pullbacks ended, and then use your LTF chart to identify how you could have identified the level in realtime before the pullback ended. I know it’s hard work, but it’s worth it. If you are suffering from overtrading and timing issues in a trending market, this might solve a lot of issues.
Once the level to initiate PB/CPB is identified, then it can be treated as either of these two setups BOF or TST depending on the strength of the pullback. If the pullback is weak, we expect that the TST of the level identified will hold and then market moves in the direction of the trend after TST. If the pullback is strong, we expect a BOF of the level identified will initiate the move in the direction of the trend. Hence PB and CPB are also a subset of TST and BOF, but the levels in pullbacks are the minor S/R, not the HTF or range S/R.
When the bias and the level to act are identified properly, I pay attention to the price interaction with the level to time entry. When the price fails to continue beyond the level, I will give my entry. It is easier said than done. I have prepared some diagrams for myself to use as a quick reference during live markets, marking the ideal price interactions of the three setups BOF.BPB and TST. I thought of sharing it to the readers as you might find it useful as well.
Remember, these are the ideal interactions. In real-time, I take the entry if it comes closer to one of the interactions when my feel for the market tells me that it is exhaustion.
When the price interaction falls in one of these, I will time the entry as close to the level as possible so that it gives me lesser initial risk and a greater probability of success. But anything can happen like the image I have shared in the FB page yesterday, but when it comes at a lesser risk and higher odds in favour, it is a chance worth taking because trading is all about taking chances.
Hope it helps,
I need some real trading advice from you this time. I am following this discretionary approach. The problem is my entries are most of the times correct, but many times I exit in minor loss before original SL is hit, and then the trade goes on to give 3-4R without hitting the original SL. After entry, the only thing on mind is not losing much, and I react to each and every candle against my bias, even though the original SL isn’t hit. Please tell how to tackle this. I fell this problem is because I don’t have confidence in my analysis. Did you face such problems when you started trading this approach?
That’s fear of loss and it’s totally psychological. If you are finding it tough to handle this, implement some passive trade management rules into your trading. Sure it will increase the number of losing trades as you will not get a chance to scratch the trade for a BE or a small profit when the trade is not working as anticipated, but if your setups are valid, you will be profitable in the long run. Active trade management and the fear of loss cannot go side by side. You need to get rid of one of these two to stay profitable. Compare your trades that are managed actively and passively, then choose the one that’s working for you. You can move back to active TM once you totally understand your whole plan.
does it happen that our bias is bullish, we are expecting BPB, and what happens in realtime is one of BOF patterns unfolds?
In such cases, do you take trades against our bias or let it go? If yes, at what point do you decide to trade against our bias?
Yeah. It definitely can happen. Let us say, you are expecting a BPB after a breakout, but suddenly the BPB turns out to be very strong. Then it’s not a good idea to take that BPB trade. When the BPB is strong, I expect for an FTC for a BOF entry. The strength of the BPB defines the bias after the breakout.