I wanted to highlight this scalp not just for the purpose of highlighting a good trade taken, but also for the purpose of highlighting a bad trade avoided.

The good trade is the one noted. The reasons for entry were:

1.) 55-tick TXD+
2.) NYSE-TICK 2nd + Tick Hook
3.) 2-minute + TRIX Hook.

What’s more was that at the time of the entry, price was appreciably far away from the declining trendlines indicating that some kind of consolidation would not be unlikely. I jumped in on the 55-tick TRIX Hook & out at the most recent trendline for a nice & quick .33 R-Unit profit.

The other thing I wanted to point out here was the area marked by the letter “A”. This is a good example of one of those things you just have to experience a couple times in order to fully appreciate why this play should avoided. In the past I may very well have gone long here at A as it was sporting a nice looking TRIX Divergence, NYSE TICK Hook, after a pretty extended 2m-minute chart.

The problem with the play is this:

1.) When the TXD appears, price goes into a small 55-tick consolidation range which it never really breaks above (a breakout above the bar after a TXD appears is the typical entry signal that I would use on such a play)

2.) After a few bars goes by, even if a breakout were to occur, the 1st target of the closest declining trendline would be so close as to yield a horrible Risk/Reward ratio

3.) The NYSE-TICK is in a downward channel making lower lows & highs. While yes, the + TICK Hook is nice, I really want to see a 2nd one for confirmation before betting against a continued move to the downside.

Like I said, this is totally the kind of play that I would have taken not too long ago (Hell, I still do sometimes, but at least I’m more aware of it) and would have often been kicked in the teeth. Its a good example of a play that the first time it happened to me I may have rated it as an “OK” trade for the reasons above. But now that I should know better, were I to take such a play it would be market as a “Bad” trade regardless of whether or not it turned out profitable. This is one of the main ways I continue to grow as a trader and it has helped keep me out of many bad trades.