I can’t believe I lost money today (-1.00 R-Unit). Really…I’m ashamed given the action today. And I should be really, because were it not for 1-2 horrible plays when I was paralyzed by hope then I would have had a +2 to +3 R-Unit day. I’ll spare you the details of those bad plays because they were just bad. The entry’s were rushed and instead of closing them out for small-moderat losses, I hoped against hope that things would turn my way and got crushed with one play alone costing me -2.87 R-Unit.

How is it possible for any self-respecting trader to lose more than 1 R-Unit on a single trade you may ask? Well, after reviewing my old trades I realized that I had been setting my stop too close for a number of setups. So I made an adjustment so that instead of having a fixed stop of say 7-ticks away for scalping, I’d place an emergency stop 20-ticks away in case my connection was lost or some sort and then I’d manage the trade much more actively.

And believe it or not, I think that the practice has actually improved my results quite a bit. I’m more engaged with each trade and more apt to take smaller losses instead of big ones as before I was much more reluctant to close a trade out for a 5-tick loss (even if it was obvious that the conditions had turned on me) and wait & hope that my 7-tick stop wouldn’t get hit. BUT (BIT BUT), making this adjustment is only possible if I can trust in myself to not do exactly what I did today which is to take that same hope that I used to use with a 7-tick stop and magnify it 3x with a 20-tick stop. I’d done well with that until today… Luckily I had this trade below which really helped mitigate the damage.

This was the trade that salvaged my day. We can see a very nice, orderly, 55-tick trendline that has held support 4x already.
Then at a little past 1:00 E.S.T. the trendline break occurs concurrently with 4 other very powerful confirmation signals. They are:
1.) 55-tick TRIX Divergence-
2.) 610-tick TRIX Hook-
3.) Just after an exponential $TICK Blowoff
4.) Followed by a break of the rising $TICK Trendline

I got out around the 728 support level when the 610-tick bar closed above the high of the low bar.
 
 

 
 
Again, I felt very not rushed today. During the times while I was waiting, I simply worked on finishing my How I Pick Stocks Page which really made time fly. When things would slow down, I would draw my trendlines, levels of support, etc; set my audio alerts to let me know when to start paying attention to the market again, and worked on actually enjoying the slow times during the market instead of fearing or dreading them.

Seemed to help.

One of these days, once I finish some other sections, the list of improvements to this site is to add a list of plays that I take along with examples of a good & bad setup. Price Divergences will be one of the first on that list and this may very well be one of the ‘Good’ examples.

Price Divergences occur when after a big Price & TRIX move one way, Price & TRIX start to pull back. But while the TRIX might pull back the same distance that just previously ran up, price only corrects by a fraction. Consider this a super-loud, multi-channel broadcast of the current market momentum.

It works the best when the up move is accompanied by heavy surging volume, as in a Vol+ and the accompanying pull back has contracting volume.

There are 2 ways to enter:

1.) Draw a trendline accross the top of the pull back and enter on a close above it
2.) More conservatively you can wait for the TRIX to turn higher

Depending on the market conditions and how much convergence there is in my other indicators, I use both methods quite often. Today’s setup had it all and yielded a very quick 4-tick profit. My only regret is that I closed my position so soon and left a full 2 points profit on the table :-/
 
 

 
 
I definitely felt more patient today. I’ve really been working hard on some different relaxation & meditation techniques so that I don’t feel so compelled to get in on every little market move throughout the day.

However, with that said, I found myself being a little too patient today and entering a hair late on the plays I did enter. Luckily for me, they all went my way, but I’ve highlighted one of the trades below.

The entry setup I acted on here is what I call a Shallow Retracement Scalp (I use the abbreviation SRT instead of SRS, don’t really know why). There are 5 criteria that I use to identify an SRT play and this met all of them. The entry point is supposed to be on a price breakdown below the bar when the first red TRIX dot appeared. This would have called for entering on any price lower than 740.80. So in all likelihood I would have gotten filled either at 740.70 or .60.

“So What?” you might be saying. So I was off by 1-2 ticks, big deal!

Turns out that it is a very big deal though, especially when your price target is only 1-2 ticks. Had I entered when I should have, I would have been covering for a quick 2-tick profit precisely at the time when I was merely entering the trade today…Not good. And there are no excuses for why I waited other than not trusting my plan and the setup. I wanted to see just a little more followthrough before entering and it nearly cost me a full stop. I got in at 740.50 and a second after I exited at 740.30, price reversed for a quick 1.5 point pop.

So the big deal comes into play when you give away those extra 1-2 “insurance’ ticks even before you have placed the trade. That’s no way to win consistently and I was lucky to escape this time.