The next immediate target would most probably lies in filling that GAP left behind in mid-July.
Ability to fill the gap and break 394, i would expect strong downtrend resistance around 400-405'
For every trade that is taken, there is 33.3% each that price would go either up, down or sideway, which is why various other supporting tools such as trendline, moving averages, BB, etc... are use to help qualitatively (not quantitatively) the odds of increasing that 33.3% to 51%.
In this break out, i see increase in volume, consolidation triangle in uptrend channel and a support at trendline & 50ema that i am at least 51% confidence of taking this "long" trade. Bearing in mind that i still need to admit if the other 49% occurs the following day.
I make an attempt not to self-sabotage/second guess my decision. If i am wrong, then i am wrong.
Look, for example, in flipping the coin 1000 times you'll get about 20 faces a row not violating the 50/50 probability, that's the mathematical fact. Even worse -- you don't know when it'll happen.
In practical terms it means that even knowing that the probability of your setup is 75%, you should be ready to the fact that 3 wins and 1 fail will not happen uniformly -- you can expect significant "strides" both in wins and fails.
I know the guy who trades through setups probability backtesting, and "strides" are big pain in the butt for him.
Here comes money management -- not to use more than certain portion of your capital in one bet, otherwise complete loss of the capital is guaranteed for long enough game. But no-one use it, right? :)
Not to derail this particular setup :)
Based on you coin flipping stats, in fact every trade is mathematically 1/3 of up/down/sideway. The traders enforce some "self-deceiving" odds to make it 51% confidence to trade, which is why i name it qualitatively rather than quantitative.
The traders who go through the pain of backtesting came out with Expectancy Win rate and they suggest not risking 2% of capital each time to have prolong continuity in the trading business. It just doesn't work for me. I trade options (on stocks, ETFs) a lot (handfuls of futures) and the pricing sometime came <2% at times >2% so it is quite a hassle to do that unless for trader who trade the real shares. And whether the 2% is inclusive of commission fee is not specify.
I do not have total discipline in money management but i definitely record down each and every one of my losing trade, breakeven trade and winning trade :-)
Before i started trading, i took up a course "Applied TA in futures trading", my teacher shows me the 2% $$$ management spreadsheet. So he does use it daily. But he also confessed that there are times when he was tempted by greed/fear :-)
I love trend channels (though channel can be broken on the upside/downside) which is why my charts are rather boring compare to others
All this coin flipping talk is rather qualitative, since probabilities are not independent, and for zillion o the reasons ...
How trade spreadsheet helps you to improve your performance?
I came across Bukowski site couple of times, but don't know anything about him. Did you find any value in him?
It's hard to imaging how to backtest this specific setup (gap+triangle+channel+overhead resistance). It might be possible, though, to estimate the resulting probability from individual component ones.
It has FILLED that purple gap and i took another 50 % profit when it hit 398.2'. By price action it is coming back to 395' to test for support, having that means final target of 400-401' which is where the Major bears are ambushing,
failing the 395' means price will look for ~390 to test for uptrend channel support.
Hence if successfully break out of that resistance, price will not fall back to tip of symmetric triangle for some time, but failing to break that resistance, price will somehow likely to go down again and fall to the tip
Thanks for nice explanation of the expected PA.
What I did on Friday -- looked at http://www.investing.com , they have real-time data charts for March contract. And the data were different, as you say.