That Happened After . . .

Have you ever heard yourself say, just when I got out, the market started to move in my favor? This could be you got out for a cost or that you took profits too early.

That happens to me more than I'd care to admit, even though I'm a chartist and have all these technicals at my disposal that I know how to read.

Sometimes as I sit there, as I did today with at least one of the 6 trades I made today. I was thinking, fine, I'll settle for taking $12.50 (1 tick). That's better than nothing and the smallest I can take in terms of profit on any one trade. It's also better than taking a cost.

When do you know when you should just go ahead and take that small profit and when should you wait for a breakout? I'm still working on this for myself, however, one way to figure a breakout is usually after a period of consolidation where there is a lot of congestion.

This can look to be in a form of a wedge of some time (descending, ascending, pennant) or a rectangle. If there are other types of consolidation, I'm not aware nor do I really care, as these are the ones I see most frequent.

Often after a breakout, the market will test to see if the breakout was genuine or not, or it may be a headfake. One good way to tell is to checkout the volume. Now, just as there is capitulation selloff, I'm not sure what the opposite of that is, as capitulation buying makes no sense. However, the thought process is similar. The market creates a false illusion that it wants to take price action up, but the market is really looking to begin selling.

In 2 of the trades I made, I was able to hold on and not close my trade too early to capture profits at the breakout. I didn't get the highs, but I got most of the move, which was good. Both times, I was taken out as the market was moving faster than I could move my limit order out of the way quickly enough. However, I am pleased with profits anyhow.

One trade, I got discouraged as it was nearing the 50 EMA, but didn't look like it would make it, so I got nervous and got out at 1 tick ($12.50), rather than the 3 ticks I was wanting. My gut was telling me that the market really wanted to move above the 50 EMA and I looked for a target of 1004. My entry was at 996.25.

Had I just left it there, I would've met my goal in 1 contract for today. Oh well.
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