100% Initial Risk level

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

Manual DP sell

Later in the Day there was a brilliant “manual” DP sell on the 3min YM.

As you can see, this nailed the high of the day absolutely perfectly.............. The YM then declined into DP support, just before the close, for a very nice +3.6R Profit (ignoring slippage and commission).

Yes this was a “manual” DP level so is for the more Advanced users among you. But do you all see how this profit, at +3.6R is much bigger than the -1R loss from the NQ example below. Small losses and Big Profits, this is the key to long term trading success.........

Thanks

Steve

Yes losses do happen

Hi Everybody,

Unlike most vendors and Gurus in this business, I do talk about losses.............. And here is an example from Friday on the 3min NQ. It is important to understand that losses can and do unfold, but the trick to a successful approach is to keep the losses small (not avoiding them). This loss at just -1R is small to the last few days where we have had a number of +3R Profits on the US e-minis.

Small losses and Big profits, this is the key to a successful approach to trading........

Thanks

Steve

Another perfect example of Patience Part 2

Here is the ES 15min Chart.

As you can see, the 3min TS4 buy came at a 15min TS2 buy. Then the 15min ES was moving up to a Wave 5 high. That was why you should have looked to hold your 3min TS4 longs and not look to swap to shorts as 3min sells came in, because the 15min trend was clearly up at that time.......

Thanks

Steve

Another perfect example of Patience

Hi Everybody,

Amazing how yesterday gave us another perfect example of an almost identical trade from the day before. As you can see, after a -1R loss, then we had a TS4 buy, that nailed the low of the day (we have now done this for 2 days running !). The ES then crept higher until the DP target was reached, where the STF was strong, so we swapped to the ATRStop for a very nice +3.8R Profit (ignoring slippage and commission).

So again, and absolutely perfect example of where patience to let the trade unfold and mature was needed.

The only question camas as some sells unfolded along the way..... But these were “against” the 15min Up trend (next post) so should have been ignored...

So again, the lesson is patience............

Steve

Patience is required

Hi Everybody,

Yesterday was a perfect example of why every professional trader needs patience.

As you can see, the 3min ES gave a nice TS3 buy yesterday, which as the low of the day. The ES then crept higher all day, to eventually reach the first projected profit target. At this point the bars low were not breached, so this long trade remained intact. The STF then broke the strength band so the trade was held until close, which was near the high of the day for a nice +4R Profit (ignoring slippage and commission).

But the point here is that there was just one trade, long form the low of the day, into the close, which was near the high of the day for a good profit. I wonder how many of you did not hold this all the way and as such did not maximise your profits on this trade. Patience is a fundamental requirement for all successful traders....

Steve

3min YM

But what I did like yesterday was how, at the same time as the ES was banking its profit, the 3min YM gave us a good looking TS4 sell. This caught the decline into the close for a nice +3R Profit (ignoring slippage and commission). Makin yesterday a good day overall on the US e-minis

Thanks, Steve

PS, there was also a lovely manual long on the Russell early in the day but as this required totally manual analysis it is beyond the scope of this Blog.