Real Live Trade Analysis

Below is the trade I took, that netted me 39 points. It was a 13 point short with 3 contracts.

My analysis began on the 15 minute chart, but my entry was on the 1 minute. On the 15 min, the chart was in an obvious downtrend, as it had made a two candle impulse move. An impulse move is a large move in one direction.

What made the impulse move more relevant, was it first bounced very hard off an important entry level for my strategy. Then it dropped. Not only that, but the impulse move itself dropped through another entry level.

In a nut shell, the market bounced off an entry level, made a big move to the downside and then fell through another entry level.

After the two candle impulse move it started to pull back. I assumed it would retrace back into that lower entry level, and it did. And it’s at this point that a lot of retail traders say, “It can’t fall any further. It has to go up now.” WRONG! It can fall further, and it did fall further. But, it didn’t fall before making a pretty solid pullback.

My clue the pullback might be close to done, was the second green candle… it was smaller than the first, which implied exhaustion.

The next candle started to “twitch” to the downside. Yes, I call it twitching, lol.

What I mean is, it started edging lower pretty quickly with little resistance pushing it back up. So I dropped down to the 1 minute chart to see what was going on there.

On the 1 minute, a head n shoulders was forming.

So, putting all of those above mentioned clues together, I entered short after seeing the head n shoulders on the 1 minute chart. My plan was to ride the trade all the way down to the zone I had drawn on the chart. I gave the trade a bit of breathing room at first, as the move was happening quickly. But then I began to tighten my stop loss and adjust it until my stop was triggered.

This is the 15 minute chart showing my analysis and the trade itself:

I had the purple zone drawn when the price was at the top of the pullback.

Like clock work, the market eventually made it to my zone, and then reacted there. I only place trades heading to these zones. Once the market gets to them, they sometimes reverse course for a little while before heading on to hit target beyond the zones. Well, that reversal of course can be more than my account can withstand from a risk/reward perspective, so I just trade to the zones and get out. As the saying goes, “the market can stay irrational longer than you can stay solvent.”

WARNING/DISCLAIMER: Investing and trading carry significant financial risks. I am not a licensed financial or investment adviser. Nothing on dumbmoneytrader.com should be considered financial or investment advice. Everything on dumbmoneytrader.com is for educational purposes only, and should NOT be considered advice. Consult a professional financial or investment adviser before making any financial decision. Never enter any investment or trade without consulting a professional and licensed financial or investment adviser. Never enter any investment or trade based on anything you read or see here on dumbmoneytrader.com.

Leave a Comment

Your email address will not be published. Required fields are marked *