In an effort to wrap up the connect-the-dots discussion, I've uploaded the first panel of the 08 series from yesterday along with a portion of that panel. The series posted yesterday represents typical trades of one who has read, studied, and practiced with the material for at least a few weeks. The initial segment of it represents what can be expected of the trader who is completely new to this and/or is terrified of entering, managing, and exiting trades.
In the first panel, the trader knows how much price can break the SL and still continue its original course. Therefore, the fact that price doesn't plunge to all-time lows is of no concern. The first swing is only 2.5pts deep. The next swing is only 1.5pts above the LSH. This is again of no concern. When price makes a lower low at 0300, the trader can draw his SL and have something to work with.
At this point, all the trader has to do is follow the leader. The SL isn't broken by more than three points until 0414. Why exit before then? Because in the meantime price has made a series of higher lows before breaking the line. This gives added importance to the break. OTOH, he could wait for price to hit 65 or 66 and enter six minutes later.
The beginner, of course, much less the fearful trader, can't be expected to do any of this. The chief objectives here are to learn or re-learn success and to gain confidence. Therefore, these two trader will stick to the lines like a banana peel. At the first RET after price has dropped from the high, they'll go short. When the line is broken at 0233, they'll exit with seven points. They will then go long at the first RET thereafter and exit for 3 or 4 ticks. They will then short the first RET thereafter and exit for a loss of maybe 5 ticks. There is no long thereafter because price makes a lower low. The next trading op is the short at 0259. These traders may exit this trade at the line break for a loss, or they may decide to go with the uber SL just above (the dashed line; note that this cannot be drawn until 0300, but the trader can anticipate where the line will be if and when price falls; he may also note the LH at 0255). If they bail, they are still in profit with 2W and 2L. If they stay with the short, they have 3W and 1L and perhaps five extra points. The recommendation here, however, would be to exit at the break of the line. To see price drop thereafter is an observation to be entered into the journal.
There are four trades in the second scenario as opposed to one in the first. This results in four times the commissions. But this is a necessary though possibly brief passage that beginners and failing traders have to go through. I credit lurkers, however, with enough curiosity to read
the pdf which explains all of this (it is, after all, only twenty pages) or at the very least to read the rules in the first post to this thread. Once they do so and experiment with this for a few days, they ought to be comfortable with trading the first scenario rather than the second. If not, there are many other approaches which may be more to their liking.
Db
(Oh, and you will find that following the rules prevent you being "torn to pieces" as you opine in another thread
