There was extremely high news this afternoon at 5:30 pacific time when the Aussie unemployment figures came out for the month. I wasn't sure if I'd find something to trade, but I sure did!
Take a look at the 5 Minute Chart. The first thing to notice is that in the roughly 45 minutes preceding the news, the market makers created a long belief. In fact, they took price just north of 1.8300 to open up what had to be a ton of long trades sitting at the double zeros. Their next move was to challenge that belief. Although it doesn't look like much on the chart, in the last 6-8 minutes before the news, they actually moved the market down by 17 pips. So, very subtly, they opened up a ton of trades and also stopped out a ton of those traders out with a nice little liquidity swap.
Then at 5:30, it was time for the fireworks! With absolutely no fake short, the market spiked up 71 pips within the first 2 or 3 minutes of the 5 Minute Candle (maybe even quicker). This was very difficult to interpret. Except for one thing. Take a look at the Hour Chart and notice that the amazing SMP software had thrown up both a dot, and more importantly, a blue buy-liquidity line. Incredibly, during this wild push up, SMP's brand new liquidity line was spot on. In fact, price only crossed the line by 4 pips before price started pushing down.
I was still a little unsure about what was going on, but price fell pretty far short. It came back up and was pretty whippy - all during that first 5 Minute Candle. I remember looking at the clock and laughing because it was only 5:32 - let me tell you, the adrenaline was flowing! After a little while, I realized that the since price wasn't pushing back past the blue line, we had already received a pretty strong clue that the market might push extremely hard to the short side. I was hoping it would breathe back and give me a decent entry.
Luckily, price did breathe back up and I finally got in a short trade at 1.8339. The trade never went against me and I was soon up roughly 15, maybe 20 pips. I had some phenomenal potential profit targets as indicated by the arrows I have drawn that are pointing at the yellow liquidity lines. I knew that if the market makers manipulated the market that hard, it was a great opportunity for a HUGE run. For risk management, I had moved my stop so that the worst thing that would happen was I would break even. So far... great job Cy! But then, at the first sign of adversity, I fell apart.
The market breathed back. I got out of the market with an 8.8 pip trade. I have to tip my hat to the market makers because they are damn good at scaring woosy little traders like me. The amazing thing about this is that I literally got out at the exact very tip top of the breath. How exact? Within 0.1 pips. Yes, if I would have had one tenth of a pip more guts, I would have pulled at least a 60 pip trade... in 15 minutes. I honestly don't really fell like I pulled an 8.8, I feel like I left 50-110 pips on the table.
The Trade Exit section of Wade's Trading Questions asks, "Do I have a sound reason to get out, or am I just feeling uncomfortable due to the current price action?" It also asks, "Am I exiting this trade based upon emotion or based upon a sound reason looking at the current chart content?" It is amply clear that I got out of the trade because I felt uncomfortable and WOOSED OUT!
So once again, the SMP software showed us an amazing entry into a trade. The lesson I must take from this is if I have excellent reason to believe there is a possibility to pull a monster trade and the worst thing that can happen is I'm going to take a zero... STAY IN THE TRADE!!!!! I hope anyone reading this can learn the same lesson without making the same dumb mistake. I must say I am glad to be reading the software reasonably well, but I clearly need to work on my execution.
As always, I'd love to hear your comments. You can comment on the blog, or reach me at pipaddict73@gmail.com.
Well, I sure blew it this morning The one good thing about the morning session is that I read the market correctly. The bad thing was I tried to be too exact with my entry. I think anyone trading SMP can benefit from reading today's post in order to avoid making the same mistake. In fact anyone trading the WealthSmart suite can apply the same concept to a pullback getting close to trend break. Here's what happened...
We started watching the market on the Smart Money Profile (SMP) Webinar at 6:00 am (as represented by the purple line on both the Hour and the 5 Minute charts). As you can see from the hour, we were clearly only looking for long trades. When the market pushed short and then showed us the green dot followed by the yellow sell liquidity line (shown by the arrow on the 5 Minute), I was looking for the classic 1,2,3 market maker move of creating belief to the long side, challenge of that belief, and then the real move in the original direction.
In the screen capture below, you can see that all three of the phases happened very quickly (please forgive my rudimentary numbering). This should have been a really easy trade for me to get into. 1: Price pushed up to create the long belief, 2: it snapped short exactly to the yellow liquidity line, and then 3: BOOM! It took off long.
My problem was that I was looking for price to snap short about 5 pips below the yellow liquidity line before I was going to enter. As you can see, price never went much more than a pip (if that) below the line. Now, there is nothing wrong with waiting to see if price goes a little further through the liquidity line in order to get the best entry possible. However, my real mistake was that as soon as it started to go my way, I should have recognized that my entry was right then and there. Instead, I kept waiting to see it back up again and go 5 pips below the line.
By the time I finally admitted to myself that I was wrong, I was waaaay late to the party. I foolishly jumped in super late. At that point, I had no tolerance for any type of a breath back, so once I saw my stupid little +3, I decided to take my profit.
So, the good news is that I did read the market correctly. The bad news is that despite seeing the market almost perfectly, I failed to see that it was going my way and didn't get out of my own way fast enough to pull the trigger. As LaCurtis and Ira have preached many times, you don't want to get married to a trade if it's going against you. In this case, I shouldn't have been married to a certain spot in a pull back just because I thought it was going there. The trade showed that it had turned in my desired direction and I absolutely should have entered. As Wade likes to say, it's not my business, it's the market makers' business - what a great reminder of this fact! I strive to learn from these mistakes and continue to do better moving forward.
As always, comments are appreciated and I can also be reached at pipaddict73@gmail.com. Have a great day out there!
