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Today, in a word: oof.

The day began with me eyeballing the Sunday night low of 4186.50:

Here’s the breakdown:

Low: 4186.50
Low of Undercut: 4186
Entry trigger: 4192
First target: 4205
Second target: 4217
Stop Loss: 4184.25

Factors in favor:

  • RSI reset
  • clipped lowest local low
  • bought up; big wick with quick price action

Factors against:

  • none that I could think of

First off, although I didn’t show it in the above chart (too much clutter), I blundered my first trade with an execution error. Instead of setting a stop order to execute once price hit 4192, I accidentally set a limit order, so it automatically filled at 4189.50. Since it hadn’t reached my entry trigger yet, I didn’t know if it was ACTUALLY going to be a FBD, so I bailed for a 4 pt loss. My bad.

Then, it DID trigger my entry, and I filled 3 contracts at 4192, and we’re off to the FBD races. But ten minutes later, price action got REALLY jumpy really quick, and even though my stop loss was 4184.25, the action blew through my stop and sold at 4181.50. This was extremely puzzling to me since my /ES chart showed that the low was only 4185.25…so how did my SL get activated?!?!

Well, ya girl learned something new today: apparently, though /ES and /MES trade pretty much the same most of the time, during times of high volatility, they can be a few points off. And this morning, /MES decided to puke a little harder than /ES and stopped me out…WOMP WOMP. It’s really unfortunate, but there’s not much I can do about it at this point; for one thing, this is the first time I’ve experience that drastic of a disparity between the two. Another thing is that I simply cannot afford to trade /ES yet, so I’ve got to stick with /MES for now. I certainly wouldn’t have changed anything about my SL. The only guaranteed solution I can come up with to ensure it doesn’t happen again is…to save/make enough to eventually trade /ES. (But that’s going to be a while.) So it’s frustrating, but onward.

Anyway: the price action on that candle was wild; on /MES, it bounced VERY quickly back up to 4192, and I market ordered at 4192.75. Based on the price action, it seemed like a FBD, so I added another contract at 4194.75. Mancini mentioned that a 4197 reclaim would be needed to trigger a possible squeeze (the RSI was oversold), so I revenge-added TWO MORE contracts at 4198.50 to give the 4197 reclaim some room (plus acting as further confirmation that the FBD was working, since heck, it’s already up 6 pts above my entry and things are looking good!). This gave me an average of just under 4197 per contract.

And then we cracked in the afternoon and I got stopped out at 4183.  Oof.

So, there are a couple of takeaways that I need to review:

  • I revenge-traded. Maybe not in the actual trade (I think the thesis was valid), but in terms of SIZE…yes. I had no business taking on 4 contracts.
  • At the time, I thought the basing in the 4190-96 area in the late morning might be considered “acceptance” and we’d move back above 4197 in the afternoon. However, I forgot that acceptance more looks like a bull/bear flag just under/above the level it’s about to break. It’s all about the lead-in, and in this case, the lead-in was a drop…so I think it was more bear-flaggy then? I do understand that lately “buy the dip” has been the overwhelming theme, but in the greater context, losing 4197 was likely more bearish than I realized. It’s hard for me to know how much weight to put on this thought since I seem to remember recent intraday bear flags being bought up and invalidated, though.  And sometimes FBDs take a little time to work. Anyway, this is something I’ll put on the back-burner and continue to ponder.

Since I counted the above trade as just one for the day (since the very first one was an execution error, and had I been in /ES for the second one, I technically wouldn’t have been stopped out), I decided to take one more swing at it.

Low: 4172.50
Low of Undercut: 4168.25
Entry trigger: 4177.50
First target: 4191
Second target: 4205
Stop Loss: 4166

Factors in favor:

  • RSI has room for move up
  • Mancini says 4167-71 is strong support
  • coming into 2 pm
  • wick on 15/30/hourly

Factors against:

  • 1:45 entry
  • fighting a downtrend?

In the spirit of trying to be mechanical in my approach and taking a setup when I see it, I took the above trade.   Although my triggers did hit, I’m now questioning the Low. The 4172.50 low was from a dip that occurred last Thursday (May 18)…it technically wasn’t the low of that day, since that day STARTED lower.  However, I justified in it my mind because 4167-71 was a major Mancini support level. At best, it was a FBD trade; at worst, it was a high-risk knife catch trade. Either way, my two contracts got stopped out at 4166. But in reality…was it a revenge trade? Probably, yes. Revenge blinded me to the warning signs of downside momentum. Revenge was the driving force of me trying to find things that weren’t there.

Revenge trading has always been my Achilles’ heel. I do think that having set FBD parameters has helped prevent me from taking REALLY random trades, but it apparently still pops up in the form of over-sizing and a sketchy-looking setup (kind of like a mental whack-a-mole). Duly noted.

Result: across alllll the trades (execution blunder and /MES stop out), today was -103 points. OOF.

I had a good conversation with Kim Ann Curtain (the Wall Street Coach) in a Twitter Space this evening about today and allowing myself to feel the uncomfortable feelings of loss. I think being aware of your own triggers/emotions is key for the mental side of trading, and though today’s -103 points is upsetting, I “forgive” myself.  It’s the only way to move up and onward!

I’m only going to count the first trade as a true FBD (I don’t think the second one technically counts because the low isn’t valid), so 9 down, 91 to go!