What went wrong here?

[james_gsx 16]

Alright, my first trade was profitable with a 2.50 ES gain. My second trade was a mistake by me, and I saw what I did wrong and lost 1.00. My third and 4th trades were basically break even since I saw my entry points were bad and immediately got out.

 

This trade bothers me though, not sure what I did wrong. You'll see we had a spinning top (I think?) then confirmation after that, I went short on the 2nd red candle at 1452.75 where price stood at a standstill for some time. I got stopped out at 1454 essentially wiping out my gains for the day. I'm wondering if I saw the chart right, and it just didn't work out or if I did something wrong?

[james_gsx 16]

I think I figured it out, I saw the top but forgot that a reversal doesn't always mean a trend will reverse. We were at the S1 midpoint where we typically see consolidation - I should have waited for a break away from that point.

 

Also on the 15min chart I was going against the major trend, and didn't have enough confirmation of the spinning top. Note that at the time of the trade, that big wick on the current candle wasn't there.

[wrbtrader 10]

Alright, my first trade was profitable with a 2.50 ES gain. My second trade was a mistake by me, and I saw what I did wrong and lost 1.00. My third and 4th trades were basically break even since I saw my entry points were bad and immediately got out.

 

This trade bothers me though, not sure what I did wrong. You'll see we had a spinning top (I think?) then confirmation after that, I went short on the 2nd red candle at 1452.75 where price stood at a standstill for some time. I got stopped out at 1454 essentially wiping out my gains for the day. I'm wondering if I saw the chart right, and it just didn't work out or if I did something wrong?

 

It's hard to follow you here because you show a spinning top that's annotated on your chart soon after 7:30am.

 

Yet, you said you went short after that on the 2nd red candle.

 

However, you have annotations about going show all the way over on the right side of the chart between 11:30am - 12:30pm as if that's where you went short at???

 

What time did you short Emini ES???

 

Regardless, there's a old saying in trading...

 

Don't let a profitable trade turn into a losing trade.

 

Anyways, one of the key aspects of Japanese Candlesticks is the trade management after entry.

 

That leads me into this question...

 

What needs to happen in your trade to prompt you to go to +1 tick trailing stop to pay for the trade if the trailing stop is hit in comparison to a true breakeven trade that's really a losing trade once you add in commission costs.

[james_gsx 16]

Maybe I didn't clarify it probably, sorry. When I get home I'll annotate it some more to make it easier to read and I'll list where I went short and all of that. I never let a winning trade go bad though. I let a winning day go bad.

[brownsfan019 17]

James,

Couple things:

 

1) First, you have to remember that candle patterns WILL fail and you should EXPECT them to throughout the day. If they were bulletproof, everyone would use them.

 

2) If you can better annotate the charts, that would help as I am a tad confused on exact entries, exits, etc.

[james_gsx 16]

Hopefully this will make more sense.

 

Went short at 12:42 MT at 1452.75

 

I saw a potential top on the 5 minute chart, the second red candle you see was where I went short as I viewed it as confirmation. Shortly after the tape slowed, and price went higher where I eventually got out at 1454.00 for a 1.25 ES loss.

[wrbtrader 10]

Hopefully this will make more sense.

 

Went short at 12:42 MT at 1452.75

 

I saw a potential top on the 5 minute chart, the second red candle you see was where I went short as I viewed it as confirmation. Shortly after the tape slowed, and price went higher where I eventually got out at 1454.00 for a 1.25 ES loss.

 

Hi James,

 

Thanks for the clarification.

 

Taking a second look at the price action of your entry...there's no valid candlestick pattern to prompt a trade entry.

 

However, I do see two consecutive Hanging Man (Hangman) candlestick lines but the low price of the first Hangman line (green) failed to test the mid-body range of the prior candlestick line.

 

The second Hangman line (red) did not close > close of the prior Hangman (green).

 

Also, the best Hangman Lines to trade are the ones involved in Close of Dark Hangman (red) > Close of the prior White Line (green) or Open of White Hangman (green) > Close of the prior White Line (green) or Open of the prior Dark Line (red).

 

Simply, it's involved as a GAP strategy which also implies it's one of those particular candlestick price action that's mainly suitable for higher chart frames.

 

Yet, as I hinted above, I also like to see the low of the Hangman test the mid-body price area of the prior candlestick line (preferrably a wide range body line) especially when the prior candlestick line is not a Hangman to tell me that the price rise is showing true signs of exhaustion (profit taking occurring) in comparison to when existing Longs sitting (not taking profits) in their positions waiting for new buyers to show up to take it higher...

 

Especially in price action where the Hangman is involved in a price action that's acting like a higher high in comparison to the prior swing point.

 

Last of all, my favorite Hangman variation involves price action where its a lower high in comparison to the prior swing point.

 

This type of price action also makes it much easier to manage a losing trade if the trade breaks to the upside prior to the stop/loss being hit via allowing me to look for position reversing (reversing the trade from a short into a long) opportunity.

[james_gsx 16]

Thanks NihabaAshi, that helps a lot. I am still learning how to see these in real time.

[timokrates 10]

Hi James,

 

from my own failures I learned that - specially if you are not a veteran - it's the best way to trade with the trend.

 

On that day we were in a minor uptrend and because of that maybe a short would not be the best choice.

 

Of course this is very subjective and I have no idea how you trade. I for myself stopped trading live at the moment, I paper trade only.

 

The main reason why i reply to your post is that I recently found a thread which could be helpfull. For me it was a good read.

 

http://www.elitetrader.com/vb/showthread.php?s=&threadid=99283&highlight=volume+analysis

 

All the best