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 firstname.lastname@example.org. Have a great day out there!