I was asked a good question on this 3min DAX DP trade, and that was “when to use the 100% initial guideline” to bring the stop to break-even. As you can see, this long DP trade did exceed the 100% initial risk level, but traded back to break-even before then rallying to reach the first projected profit target. (Yes we did then swap to the ATRStop where a +2.3R profit as made).
So why should you not have used the “100% initial risk guideline” in this example ?
Well, it is all about the “larger degree” trend. As I have said many time before, we only use this guideline when we are unsure about the larger degree trend. In this example the DAX was rallying off a Wave 5 low, so the larger degree trend was clearly up. Hence we could take longs with confidence so there was no need to look to protect profits quicker, so the 100% initial risk guidelines should not have been used.....
Thanks and I hope this helps ?
Steve
So why should you not have used the “100% initial risk guideline” in this example ?
Well, it is all about the “larger degree” trend. As I have said many time before, we only use this guideline when we are unsure about the larger degree trend. In this example the DAX was rallying off a Wave 5 low, so the larger degree trend was clearly up. Hence we could take longs with confidence so there was no need to look to protect profits quicker, so the 100% initial risk guidelines should not have been used.....
Thanks and I hope this helps ?
Steve
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