It’s certainly not perfect, but interesting to note.. How to make it more accurate, or rather, what filters to apply, is an interesting problem to tackle. I find it feasible to be very clever and aggressive with position sizing and entry points to make some great profit, but:
1) testing and
2) long term repetition
are my main concerns. It may be worth tackling now that I’m much more in tune with how things “work” (although still have plenty to learn), as opposed to what I think a lot of newbies try (and I did) when I was first introduced to trading. It’s very easy to get into the “what if I.., what if I..maybe I can..” mindset. The problem is that when one is unaware of their surroundings (close by S/R, unknown conditions/movements/unfoldings, the position is dead.
There are some interesting “gut” things that occurred in this trade I took. The trend is up and therefore you should only really be comfortable taking longs. As an aside, one of the random thoughts that I had is that from what I’ve done and “confirmed” with others, it’s actually quite hard to know where a continuation wave will end. This may have something to do with what is actually occurring in a (up) trend: people are buying, bandwagoning, adding on, etc and this makes it hard to know how high it will really go. On the other side, retracements of the larger range may be more likely to hold because the people who are currently in sync already have additional limit orders that are waiting. The aggregate of these may be enough to protect the levels. Kind of elementary theory, but thinking it through helps me a bit.
Anyhow, as price unfolded and moved up (and therefore meaning that me being sneaky peaky like was looking to go short) I only had a few spots short, given my current toolbox. The main one I’m using is the simple 5 bar fractal. I’ve considered doing a more rigorous test, but haven’t quite done so (writes in notepad). The trigger for this is just the break of the range. There is plenty of room for a fake break and a disastrous position. But it kinda works out nicely when you can mindfully get some other factors in your position, and it’s great when the range is not too big.
When you need 50-60 pips as a stop and the wave is only really expected to hit 150 or 200 (and often times 100-130), you only get a set up of 2:1 or 2.5:1. Ideally you want something like 4:1 I think. The only two windows for entry here are shown in the two yellow boxes. The more aggressive option is to take the position and then add somewhere in the blue box. To me, the stalling here means that the top is less likely to break higher. Now I am beginning to see that it also functions as a flat as well. Doubling up on risk – but does this new position present better odds than the previous? I’m wondering if the individual sizing of the bars during a move are important to take into account..