Just over a month ago we discussed the fact that the majority of my trades lately seem to fit within one of two broad categories.
(For those with the YTC Price Action Trader, the first category will include all variations of PB, CPB and BPB trades. The second category will include all variations of TST, BOF and any "reversion to the mean" scalp against an existing trend. For the second category, note that I will rarely be entering against strength. Look within the TTF/LTF to see weakness late in the over-extension, or on a subsequent retest. But the whole sequence should be over-extended.)
The prior article offered an example of of the first type of trade. If you missed that article, you can find it here – http://yourtradingcoach.com/trading-process-and-strategy/dont-overcomplicate-things-1/
The focus of these articles was on using the lower timeframe chart to confirm a lack of buying interest after the break. And for timing the entry at the point where we feel any later buyers have completely given up all hope of their trade working.
But there is another VERY important point from these three breakout failure trades, that I think we need to discuss. You may have noticed it. I HOPE you noticed it.
But just in case you didn't…
- They all look much the same.
They all fit (perhaps loosely) into the broad description for the second type of trade.
Let's examine all three from this perspective.
Don't overcomplicate things.
Keep in mind a visualisation (or a series of visualisations) which broadly capture the vast majority of your trades.
It can help provide confirmation of the trade idea as it's setting up.
And more importantly, confidence in execution.