I have a question for those traders who trade by setups and price action. I would like to know if others have experienced this phenomenon. Here for example you have a well chosen setup that basically is pointing to a resolution to the upside. This can be a pattern based setup but does not really need to be. Price action before the anticipated trigger has not invalidated this setup and the anticipated direction of price in any apparent way. But when the price moves to trigger the setup, it stops just short of triggering the setup and trades at about that price level for a period of time, like a very long pause. Then price end up moving to resolve the setup, but in the opposite direction to what can be anticipated from the setup itself. For me, during this "waiting" time, price can look like its ready to trigger multiple times, even extending itself a bit beyond an anticipated trigger point, but nothing ends up happening. That is until it moves with some ghusto in the opposite direction
Put in other words, has anyone waited for a trigger of a setup to take place, and after an unusually long period of time went by, longer than what would normally be expected, price moved in the opposite direction of what you anticipated? Hav you found this to be perhaps an infrequent but repeating phenominon in your trading of setups? How do you choose to manage a trade like this?
For myself, I find this in the SPOOs with trading bull and bear flags. If I catch on quickly enough, I setup a position to enter in the opposite direction. If price pauses like this to move in the opposite direction that I am prepared to take, I do not lose money by the way I place my entry stops. So when this happens, I am eitehr watching from the sidelines, or I am making money in a trade going the other direction.
Thank you!
Bob Graham |
