Double Tops

Later in the day there was another example of a history triangle appearing when the market made a double top. This is exactly the same as the situation I covered in detail in yesterdays post.

The end result was a nice +2.8R Profit (ignoring slippage and commission) as the YM declined into the first target. Yes, it would have been nice to catch all yesterday fall, but +2.8R added to the +1.5R form earlier meant yesterday was a good profitable day, and that is what the Professional traders among you will be focusing on, not the “what ifs” ! Remember, we are here to make money, and that does not require us to catch every swing in the market. Amateur Traders seem to forget this sometimes.

Thanks, Steve

Trade management

Hi Everybody,

Today I would like to look at a question I get asked a lot, and that is how to manage a trade that has not hit the first target and is currently on a good Profit. Like the TS2 short on the 3min YM, that had a “open” Profit of +4R before starting to retrace.

My view is that when an open profit gets this big, it is always a good idea to look to “lock in” at least part of it. Here we can use the DP (form minor swing), or if that is not available, we can look at the “minor pattern” of the recent swing. If you look at the decline from the TS2 sell, you can see how it unfolded as a “minor” ABC pattern (as found by the Elliott Wave tool). So here you can use the high of the minor Wave b swing for the stop position. This then locked in a nice +1.5R Profit (ignoring slippage and commission).

Sometimes stop movement is easy and obvious, but sometimes it is a little more tricky, like here.

Thanks, Steve