The first M, in red, was a valid trade. It was possible to get to B/E and wait for it to deliver. IMO it didn't deliver enough to warrant being rated as a potential "failed M etc...." trade. On the FTSE I use 0.5%, which on Cable equates to around 80pts. Trading the breakout through its top would have been over aggressive IMO based on FTSE findings.
The second M is a cracker. I've included the S/L, entry and initial target on Price. The reward:risk ratio is clearly OK. Make sure you go through the checklist for all the other rules.
When there was a chance of the W forming I moved into defensive mode and locked in profit. My exit would have been on the W forming on Price AND moving within the SD=1 Band.
Ws that form on the SAME time setting as the original M are rated as big dangers. I forget the rules for entering a trade, if they form on Price, I get out whatever their quality.
IMO there is a big difference between putting money from the bank into a trade compared to being too casual about conserving profit from a runner.
The trade survived but later another W started to form on 25 min., and I took the view that the market was having another go at reversing. I waited for it to form on RSI and go back above the SD=1 band, got stopped out. IF I had sat back and waited for it to form on Price, like I did with the first one, then I would have survived.
Now for the second trade, in which I did not cover myself with glory.
Inverted H&S, only the black W is traded, no anticipation!
Entry 16190, S/L 16150,initial target 16250. Reward:risk ~ 60:40, OK.
Quickly go through the other rules, no problems.
I just didn't like the way it panned out. Seemed to keep hitting its head on around 16210 and it broke down through a wedge I had drawn on the 5 min chart. So I closed it for a loss of 13 pts. As soon as I did that it started to go back up again, got to B/E and into profit......
I am still very much a novice at trading the Cable since this was my first one! It is a long time since I got caught out like that on the FTSE. I might have closed down half on the FTSE but not all of it, the base of the W never came under threat.
On reflection it was very poor technique, I got drawn into action by the 5 min Price action and forgot about the biggger picture i.e. the 45 min one.
cheers theory
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