The first opposing trend bar in a channel

A channel provides few entries and can drag for many points. One of the most reliable entries in a channel is to fade the first opposing trend bar (b15, b27, b60). You can usually sell the close on limit with a tight stop say 2 or 3t. This works particularly well if there were no opposing bars since channel inception.

The reason it works is because this is essentially a first channel breakout that you expect to fail. Note that you need a trend bar with a strong close. A doji such as b57 or a weak close such as b11 is usually not reliable. Often this is just an optimization since you get a signal right after (b16, b30, b61) and you can simply choose to trade it with a normal stop entry.

Unable to hold, exiting early I - Drawn out move

Human beings are naturally impatient and this often works against trading profits. While being unable to hold for long durations is far better than being shaken out, it can often cut profits deep enough to be of some concern.

For example, today if a trader bought b19 and held through the horizontal movement around b20-24, he would probably plan to exit on an L2 if the signal is good or on the third push up. Technically, he should exit when the price ticks below b37 or just above b35 (during b39) and then wait for more price action.

However, the sideways movement right after entry is likely to have caused him some distress and question the strength of the setup. He may consider the movement as BW and expect any BO above to fail and cause the market to drop below. He may read the bear bar b23 as a break in the trend or b21 and b23 as two interruptions in the trend making b26 a third push up to the ema and exit (or worse reverse his position). After all, thats exactly what happened at b10-13. If b21 had been a large trend bar with a strong close, he would have less of a problem sticking to his plan.

The solution to this to understand what b20-24 really is. Its an attempt to fail the reversal and many reversals have such a pattern right after if the entry bar is not a large trend bar. b15 was an fH2 that triggered off the first attempt to reverse at b9 and succeeded in failing the attempted reversal. b23 was a signal bar that attempts to fail the reversal off b19, making it an fH2 if it triggered.

Price action such as b20-24 is to be expected right after a reversal if the entry bar is small and the trader has two techniques to deal with it. First, take a first profit at +2 and move stop to breakeven for the remaining position. The very act of taking a profit increases your confidence in the setup and your trading in general. The act of moving the stop to breakeven releases anxiety since the mind perceives lighter risk. Once you hold through the first pullback, sticking to your plan becomes much easier.

Getting Shaken out V - Mid-bar decisions

One of the troubles that plague discretionary traders is that they are impacted by every tick of the market. Whether the bar grows or pulls back, flips green to red, approaches their stops or moves away will drive all kinds of elation and anxiety in them and this often drives them to make rash decisions.

For example, today if a trader bought b4 and moved his stop below b5 after it closed, he should simply wait to either be filled on his target or be stopped out. A weak trader may see b6 turning red when its  near its bottom and may wonder if it could turn into a 1PB short. He may feel compelled to exit his long position or even reverse mid-b6. He may reverse to long by buying above b7 and get stopped out at b11 and so on.

This kind of trading consists of second guessing yourself on every tick and changing your decision based on mid-bar appearance. Note that most trading methodology is based on how a bar looks after its close and not how it looks mid-bar. So there should be absolutely no reason to make a decision mid-bar.

Once you enter a trade and set a stop, it means that you are willing to tolerate a pullback until your stop. If you cannot tolerate a shallower pullback, then you need to find a trading system that allows a smaller pullback.

The right thing to do is to let the market either fill your target or stop you out if you are wrong. The only time you should exit early is if the market presents a reasonable opposing trade that you may have taken if you were flat. For example, The DT and W at b24 made me exit my swing long earlier and the long near b64 low was no longer viable after the final flag/1tf/W at around b72 and I exited it before my target was filled.

Being able to accept a loss at your stop will also enable to hold till your target is filled. If your stops are regularly taken out, you can simply drop that setup. If your targets fall short all the time, you can learn to have a bit more modest expectations.

Simple 1PB

The simplest 1PB consists of a trend move from the first bar, i.e., at least two trend bars that break beyond the first bar (b2-b4) and then a pullback to a higher low. If the bar that began the pullback is a reversal bar (b5), then its best to take a 2 legged PB or a second entry. A mW such as b6,7,9 today can also act like a 2L pb.

Factors strengthening the 1PB signal are:

• A two legged PB or a mW PB
• strong close on signal bar
• signal bar not too large
• signal bar at ema or trendline

A 1PB that takes out the prior extreme of the day in one leg can often be held till the end of the day. A 2 legged move however often stalls or reverses at the extreme of the day and its best to exit and wait for the next signal.

First bar: doji - Tight days.

A doji first bar can give a diverse range of days from tight ranges such as today to large trend days and wide trading ranges.

A tight day such as today is extremely dangerous to trade if your first target is 2 points or larger. Halving your target is poor risk management since you cannot practically also halve your risk. So a 6t risk with a 4t profit potential requires far higher probability of success and even then the rewards are usually not worth the pursuit.

Any trend attempt that rapidly degrades into doji bars (b16-20) should always raise suspicions of poor trading action and you should sit out until the bars become normal or price breaks out. Most bars after the initial move were in a 3 point range and the probability of success of price action entries is extremely low so its best to sit out.

The ideal first reversal

The simplest to read kind of first reversal is a trend move from open consisting entirely of trend bars that penetrates a support such as HLC of prior day or ema (today was both C of prior and ema) and gives a reversal signal.

If the reversal signal is weak (for example, it has a large entry side tail or is a bar of the wrong color), it is likely to take out the low and try a second time.

Such a 1Rev is often the low of the day and will close near its high so its a good candidate for a day long swing. In practice, if you get a very sharp move (b31-35) that looks like an overshoot and gives a decent profit, its a good practice to take some or all off and wait for more price action.

Getting shaken out IV - Recent losing trade

A recent loss shakes your confidence in your next trade often without you noticing it. For example, suppose you shorted b9 and were stopped out on the next bar at b10 high. Another setup bar forms at b11 right away and you re-enter. Chances are high that anything other than bear trend bars will force you to exit early. So when b16 is forming and looks like a bull bar near its high, you may decide to exit on the next tick above and get out exactly where stronger traders add more to their short position.

Its likely that if you did not have a recent loss, the pullback wouldn't bother you that much. Its important to know how wins and losses impact you and to learn not to be overconfident after wins or scared after losses. One way around this is to let some time pass after a losing trade. If you choose to wait for two swings (b10h and b15 l) and only take an entry after that, you may possibly read the fH1 at b16 correctly and hold longer.

If you are a trader who often or even occasionally experiences a series of losses every few bars, you need to follow the two swing wait rule after exiting any trade regardless of whether its a win or loss.