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We finally got a tradable bounce today! And I was finally able to catch some points via the fake breakdown that happened this afternoon.

In full disclosure: I took a few trades before this FBD.  I did short this morning after it seemed like price was not making much of an effort to break the 4335 level after the bell. Since it’s not a FBD, I’m not going to go into too much detail about it, but I took full size: I then took profit on the core position at the first level down, had one runner get stopped out at breakeven, then price revisited the lows and I decided to take profit on my long-distance runner at the second level for a total of $190 in profit. In retrospect, I should have just let my long-distance runner do its job and just manually drag my stop behind each 15 min cluster of resistance. (Actually, I should probably have just let my 1st runner have a slightly wider stop…I think Mancini sets his runner a few points below breakeven once things get going.)

I tried a knife catch trade when price first bounced in the 4290-4295 area (entered at 4301), just 1 MES because it seemed like 4290-4295 was a significant level. But then I got stopped out at 4286 when we continued our descent. Mancini had mentioned this was a high risk knife-catch in his newsletter; I do think it was worth the attempt. Should I be flirting with this sort of strategy at this point? Mehhh…maybe not. Sometimes direct buys (another Mancini strategy) have worked well; but in this situation, I convinced myself that we were on the upswing of a bounce/squeeze, but it happened to be premature. Oh whale.

I did one more very impulsive trade trying to long 1 MES at 4287.75 a little after 2 pm, but then realized I was being quite impulsive, and closed for a small loss at 4284.50.

So I chewed away at my $190 profits to about $100. FACEPALM. One of the things I am working on is to be better about not giving profits back to the market.  Mancini talks a lot about this, especially about trying to minimize the number of trades and not overtrading. Clearly, I’ve got work to do.

BUT. On to the FBD! I started to re-think the price action around 2:20 pm. Mancini did mention as 4280 being a spot he liked for a knife-catch, and price had just pierced through to 4277.25 and reclaimed 4280…though I’m not sure that 3 points really counts as a reclaim. However, once I saw that price revisited 4280 and it bounced again, I thought I’d take a stab at it at 4288 with 1 MES and scale in if things started moving up. Then, once price got going, I bought my core position at 4293 (I figured it reclaimed 4290 and this area would trigger a lot bids and short covering). I then took my final runner at 4297.25 (thinking that would be pretty decent confirmation of the reclaim of that area) and it’s off to the races.

Here’s the breakdown of my trade today:

Low: 4277.25
Low of Undercut: in this case, it’s not an undercut – it’s a reclaim of the 4290-95 level
Entry trigger: 4297 is safest, but I scaled in earlier: 1 at 4288, 3 at 4293, 1 at 4297.25 (average is 4292.85)
First target: 4308
Second target: 4314
Stop Loss: 4274

Factors in favor: 

  • RSI is buried; lots of energy for a squeeze
  • Mancini says needs to reclaim 4290-4295 level
  • 4280 was risky knife-catch level
  • Confluence – price piercing through support channels; reclaim would be pretty big

Factors against:

  • not the usual “local low” kind of FBD that I look for

I took profit on the core position at 4305.25 like a scaredy cat lol. The first level up was 4308, but I was concerned since there was previous support at that level, there might be some resistance and I wanted to lock it in a few points early. Given the energy available per the RSI, I should have just held out for 4308, but fear got the better of me. I did let the 1st runner hit the next level as planned (4314), so good job me! Finally, the long-distance runner…I think I handled it the best I could for today. In the past, I used a 10 pt trailing stop, but I didn’t use today because 1) I accidentally deleted my Trailing Stop setup in Ninjatrader a few days ago and, I’m trying to figure out how I set it up the first time, ha 2) I thought it might be better to try the Mancini way of manually dragging up the stop to just under the nearest 15 min cluster of support. I’ve noticed several times over the last month or so that his way tends to net more points in the long run.

I’m sure Mancini is swinging his runner overnight with a stop of 4290ish, but since I’m on this eval account, I can’t swing anything. So since I have to exit regardless, I decided to use his manual trailing stop method, which hit on the dip at 4306.75. It’s unfortunate since it was a 20 pt drop from the high, but if I’m going to practice trading like Mancini, this is my best effort to do so.

Overall, I think I handled this last trade ok. Lots of room for improvement all around, but happy to get eyes on an FBD (granted it looks like an FBD moreso on the higher timeframe than the usual intraday ones I’ve posted before). 17 down, 83 to go!