This was a nicely shaped inverted C&H with nice volume formation, but I've got caught in this bear trap. I'm saving this chart for future reference, and I am looking for clues to avoid/minimize these situations.
(I actually entered below the $200 dollar mark since this is a quite significant round number.)
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Edited on Sunday, August 3.
I am including an excerpt from an email received from Jamie regarding bear/bull traps:
"Bull/Bear traps are a fact of trading. The only way to minimize the risk is to ensure that you have a solid B&B setup going into the trade. The BO is the most important part of the trade to manage. I usually do this on the 1 minute timeframe. Ideally, if the stock breaks wide, there's a good chance of success. Either way, I use the 20 EMA on the 1 minute timeframe to manage the BO. I allow for a retest up to the 20 EMA. If price breaches the 20, I expect it to reverse immediately and make it's way to a lower low. This can take time as there's a lot of backing and filling, but if price retests the 20 a second time with a higher high on a short trade, it's time to say goodbye. I'm not one for holding until a stop out, if the stock makes a weak attempt to BO, I'd rather scratch the trade and move on to something else. There's no way to prevent bear traps as I've been in trades that were well underway off of the BO, only to reverse sharply carving a huge flag pole and taking out the stop. Fortunately, these situations don't happen too often, otherwise trading would be for gamblers only."
8 comments:
Can you share what you may have learned from this chart and how to avoid it in the future?
The 12:50 bar looked really promising with the increase in volume. Too bad though.
Thanks.
Hey PDT~
Unfortunately, I am not really making a lot of progress on these situations. I get caught on these ones every now and then and I am still not sure why. It is possible that the $200 number acts as a very strong magnet and that price tends to stick to it (in today's chart price gravitated around that number throughout the session). I got caught in another one recently but I don't remember which one it was. I asked Jamie for his wisdom on this; hopefully he will have some time to respond over the weekend.
Cheers,
Do let us know what Jamie says. If you get some time, pls. visit my blog http://daytradr.blogspot.com/
I am new to day trading and would love some positive criticism as to how I can improve, what mistakes to avoid, what to look for when trading a particular pattern etc.
Hi day tradr~
I posted the excerpt of the email from Jamie in the main body of my post.
I'll visit your site!
Cheers,
Thanks Anarco for the excerpt from Jamie's email. I am learning from Jamie's trading and his advice is invaluable.
I see a symmetrical triangle/wedge(yesterday's close-today's first half hour)breakdown at 10:30 into a previous 8 day consolidation area which might have attracted buyers, covering. Also .88 fib retracement 199.176, the $200 magnet. That wedge BD might have been a better entry, imo.
I see a symmetrical triangle/wedge(yesterday's close-today's first half hour)breakdown at 10:30 into a previous 8 day consolidation area which might have attracted buyers, covering. Also .88 fib retracement 199.176, the $200 magnet. That wedge BD might have been a better entry, imo.
I see a triangle in the 1 min chart, and a breakdown around 10:30. That would have been a nice entry.
I do not see the retracement :-(
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