SP500 - Analysing my stopped short. What's next strategy?
After the stop on SP500 short it is time to examine the trade, in this case why it did not work, if there were any mistakes, and especially what can we learn from it?
All in all I think it was not a mistake to take teh short treade: timing was good, the setup was clean. Also the stop I think was at a good level. The problem was one thing: I did not realise in time, that on the daily time fram the Slow Stoch turned back to positive, while the so many times mentionned 1845-1840 key level held well on the 4 Hrs. Also on the daily time frame the px action took place only down to the Kijun line, and immediately popped up from there. Putting it all together, there was a very lmited chance for a follow through in price action. Also the No. 1. rule on Kumo breakout trades and on the Ichimoku basic strategy (which initially looked excellent), that in case the px fails to break the previous Key support/resistence, then we can not say a new trend has chance to firm and develop. What is now pretty obvious, that the previus wedge break was good for only one thing, to establish a wider short term bullish channel!
So to summarize: when we opened this trade, the probability of winning was good, but maybe the risk reward was not the best (was not even 1:2 expected)! This was one weakness of the trade. The other "mistake" maybe was that I told you in my yesterday comment to hold on the short with same stop level. I should have realised yesterday what I am writing about now, and say move the stop a bit lower at least.
The good news is, that with this obvious short term bullish channel the strategy is very clear now: Enter into bearish trades only on the top, or on the lower break. Since I hate to go long equities here, until px reaches any of my short criterias, I leave it alone.
All in all I think it was not a mistake to take teh short treade: timing was good, the setup was clean. Also the stop I think was at a good level. The problem was one thing: I did not realise in time, that on the daily time fram the Slow Stoch turned back to positive, while the so many times mentionned 1845-1840 key level held well on the 4 Hrs. Also on the daily time frame the px action took place only down to the Kijun line, and immediately popped up from there. Putting it all together, there was a very lmited chance for a follow through in price action. Also the No. 1. rule on Kumo breakout trades and on the Ichimoku basic strategy (which initially looked excellent), that in case the px fails to break the previous Key support/resistence, then we can not say a new trend has chance to firm and develop. What is now pretty obvious, that the previus wedge break was good for only one thing, to establish a wider short term bullish channel!
So to summarize: when we opened this trade, the probability of winning was good, but maybe the risk reward was not the best (was not even 1:2 expected)! This was one weakness of the trade. The other "mistake" maybe was that I told you in my yesterday comment to hold on the short with same stop level. I should have realised yesterday what I am writing about now, and say move the stop a bit lower at least.
The good news is, that with this obvious short term bullish channel the strategy is very clear now: Enter into bearish trades only on the top, or on the lower break. Since I hate to go long equities here, until px reaches any of my short criterias, I leave it alone.