As of May 12, 2023: 6 FBD trades down, 94 to go! Well, probably more like 5 FBDs…the one I took today I am not so sure would qualify as a true FBD setup now that I’ve pondered it a bit more. So we’ll say officially: FIVE down, 95 to go!
I’m not planning on reviewing every single FBD trade on here, but I will aim to do one or two a week if I can.
On Friday, May 12, I took 3 trades. Let’s break it down:
There were 3 potential FBD areas I was looking at in the morning.
- The blue line was a rough local low area that appeared to be support from the overnight session: 4148
- The white line was Thursday’s low of the day (LOD): 4121.50
- The yellow line was Wednesday’s LOD: 4112.25
Trade #1 Setup:
Low: 4148
Low of Undercut: 4146.5
Entry trigger: 4153
First target: 4165
Second target: 4175
Stop Loss: 4145
NOTE: When trading, I’m usually on either the 30 min or 1 hr chart, and I sometimes use the 15 min chart to execute. However, in order to show roughly where I entered/exited, below are 5 min charts.
After the bell rang, price dropped below the 4148 level to 4146.50 before coming back up. My entry trigger was 4148 + 5 pt = 4153, which hit, and I entered with 2 contracts. Price reached as high as 4155 before wooshing down and stopping me out at 4145. Looking back on this, this was not a trade I should have taken; I was looking at a local low rather than a previous low of day (LOD), so upon further clarification from Mancini, this was not a true FBD setup. But the price action of the wick reaction seemed strong to me (but then again, this was also close to the opening bell, so that kind of action is to be expected, too), so I took the trade when it triggered an entry at 4153 but got stopped out at 4145. (This is the trade I am deciding not to count towards the 100 FBDs since it’s not technically a legit FBD.)
Factors in favor:
- wick bought up
- reclaim of Mancini level
- RSI has room for move up
Factors against:
- local low, not overnight low; not easily identifiable low
Result: -8 points per contract
Trade #2 Setup:
Low: 4121.50
Low of Undercut: 4114
Entry trigger: 4126
First target: 4134
Second target: 4144
Stop Loss: 4113
Next, price headed to Thursday’s LOD and undercut and reclaimed the low. However, this occurred in the 11 am – 2 pm “no trade” window (about 1:30 pm). HOWEVER however, based on Mancini’s twitter commentary during the day, this seemed like a legit FBD; the move back up reached all the way to 4128ish — it seemed like a safe entry. But alas, it went back down and stopped me out at 4113. Looking back, a smarter stop would have been under the NEXT low (Wednesday’s LOD at 4112.25) since it was so close. I’m not sure why I didn’t just put my stop under there (which I ended up doing in my next trade anyway), except that the risk was already 13 points. Which is something I need to consider moving forward: there may be good FBD setups in the future, but if my risk is too large, I need to thoughtfully consider if it is worth taking.
Factors in favor:
- bounce of 4114 megaphone support
- low is prev day low (for real this time)
- RSI has room for move up
Factors against:
- not in post 2 pm window (entered 1:30ish)
Result: -13 points per contract
I think this was a legit FBD that failed, so I have no regrets taking it (though perhaps a regret about the logic of this particular stop loss, maybe?), though if I HAD followed my “no trade window” rule, I would have avoided this loss entirely. So there’s that!
Trade #3 Setup:
Low: 4112.25
Low of Undercut: 4111.75
Entry trigger: 4117
First target: 4123
Second target: 4134
Stop Loss: 4109.75
Finally, price undercut Wednesday’s LOD. This was the setup I had hoped to take earlier in the day, but I was doubtful as to whether or not we’d even get that low (narrator: we did). Perhaps this was naive, but I had a fairly strong conviction that this FBD would work and we might even get a multi-level bounce/squeeze into the afternoon. So I actually scaled into THREE contracts (one at 4115.25 and two at 4117) around 2 pm. It took a little while (price went back to the lows), but it eventually started making its way back up. I sold one contract at 4123; normally, I would sell the majority of the position at the first level, but I thought if we reclaimed 4123, chances were decent we’d get to the next 4134 level and I’d try to get a little more meat off the bone. Maybe that was greedy/dumb, but either way, I chickened out and sold the next con at 4129 and the last one at 4130. We were approaching 3:45 pm, and 1) I wasn’t sure if Tradovate would auto-liquidate me (usually it will auto-liquidate 15 min before ES futures stop trading), and 2) I know that at 3:50 pm, the algos usually kick in, and there can be some wild price action, so I thought it best to exit before all that happened.
Factors in favor:
- post 2 pm
- DISTINCT low (the lowest of the lows)
- big down day; RSI has room for move up
Factors against:
- fighting a downtrend?
Result: +7.75 points on 1 contract; +12 on the second, +13 on the third
All in all, it was an educational day. I’m mostly proud of the way I traded since it was more logic-based and less emotional than I have traded in times past. However, I must confess…I broke my rules on Friday and bought a 0.30 SPX 0dte call at the lows. Had SPX squeezed like crazy, it could have been an epic win for a $30 risk. But that’s not the point; the point is that I let my degen impulse get the best of me, and I broke my rules. So I’m going to be transferring in $30 back into my account as a consequence. I have GOT to practice restraint and discipline! Because how you do one thing is how you do everything.
But here we go; dusting myself off and see what opportunities this next week provides. Let’s go!