I always wait for a red bar on the footprint (range per bar, standard: 16 ticks) before stepping into a short. I want to see other traders commit first, then I join them. This means my entry is essentially never the exact top of the reversal. I got in around 7163s.
A more aggressive short, which I often take, is not waiting for a retest at all and simply shorting the first red bar. Today’s first red bar that traded above ONH and failed was a much better reversal bar in terms of order flow than the reversal bar at the retest.
What made today’s example a textbook LAAF was that we actually got a retest as well, so one could have shorted 7166 and used the HOD at 7171 as risk. I shorted 7163s and used that retest reversal bar as my risk (7167).
Unfortunately, the outcome of the trade was not ideal relative to its potential, which was in the 20–50 handle range, but the small risk still made it a very good trade.
I just sent you an email asking for advice, and it's incredible how well it matches this explanation. Thanks, Smash, for taking the time to explain it, and Tommy for asking this gem.
Thanks Smash. Do you short 7166 at “3” on your photo or wait a little to see buyers get absorbed and enter a bit lower?
I always wait for a red bar on the footprint (range per bar, standard: 16 ticks) before stepping into a short. I want to see other traders commit first, then I join them. This means my entry is essentially never the exact top of the reversal. I got in around 7163s.
A more aggressive short, which I often take, is not waiting for a retest at all and simply shorting the first red bar. Today’s first red bar that traded above ONH and failed was a much better reversal bar in terms of order flow than the reversal bar at the retest.
What made today’s example a textbook LAAF was that we actually got a retest as well, so one could have shorted 7166 and used the HOD at 7171 as risk. I shorted 7163s and used that retest reversal bar as my risk (7167).
Unfortunately, the outcome of the trade was not ideal relative to its potential, which was in the 20–50 handle range, but the small risk still made it a very good trade.
I just sent you an email asking for advice, and it's incredible how well it matches this explanation. Thanks, Smash, for taking the time to explain it, and Tommy for asking this gem.
This is gold. Thanks for the thoughtful reply.
Thanks Smash!
Muchas Gracias hermano latinofono Smashelito !
Estaba esperando tu boletín. Lo leo y despues voy a dormir. Al día de manana…
Thanks Smash!