Emini Day Trading Lessons: +6.75 Points – Consider Risk Before Profit
Today I missed out on a number of potential points of profit but that actually made it quite interesting. It wasn't a lack of focus that made me miss them though. It was simply the price that had to be paid on this particular day for higher quality trades.
The three blue circles on my chart were all potentially valid trades. I decided against taking them though because of market factors that lowered their probability.
In the end two of those three potential trades worked out for 2 points. This means that if I had taken all three I would have made a decent profit. Contrary to common belief however, trading isn't only about maximizing profits.
In reality, trading well and with consistency is more about managing your risk than anything else.
Although today the result of these three trades was positive that might not be the case with a larger sample size. It's better to be safe and to keep your risk low or non-existent when the edge is less obvious. There will always be a higher quality trade on the horizon.
Now on to the actual trades. After passing on the first potential long at the open we did have a second pullback that was good for 2 points. This move was quite strong and I might normally consider expanding my target on a trade like this, however the upcoming news release and our overall position within the market structure meant taking the points was a good idea. In a recent recap I did take the rare approach of holding through news but if you compare the situations you will see they are in fact quite different.
From here price moved down strongly at the news but pulled back to a dangerous area. I considered a manual trade here if we held at our area but price pushed through without looking back. This trade would have worked out after a bit of drawdown but again we passed due to following our rules.
We then began to consolidate tightly on the edge of a nice market pattern. This eventually gave me an entry that fit my rules that I was comfortable taking. Resistance had been strong recently but the odds of a breakout were becoming higher with each new test.
Price is always going to break one way eventually so it pays to have a plan to trade it.
Unfortunately the breakout didn't happen immediately as I was hoping for and price came back on me a bit. At this point I was thinking that the trade was probably going to turn out to be a loss but I had my areas and rules for management which kept me in until the trade was no longer valid. We then made our breakout move and is so often the case with these plays it came with excellent momentum. For this reason I adjusted my target and waited for price and momentum to slow before taking profits.
My final trade was a no-brainer but the management was a bit more difficult simply due to a very long consolidation delay. It took 40 minutes to make its move and momentum had slowed right down. Due to that slowdown I adjusted my target accordingly well in advance and it was hit cleanly. There was definitely more to be made on this trade but rules are rules and in this situation I traded it in the way I was most comfortable with.
As long as you follow your plan there should be no regrets about missing a point or two.
- Strike While The Iron is Hot - March 1, 2021
- The Path to Becoming a Full Time Trader - February 22, 2021
- Looking to 2021 and Beyond - January 20, 2021
