Today I want to share some thoughts on a pattern that I usually skip in my own trading. I wonder if maybe these are trades I should be making …
The table above shows a sample nearly an anti. (See other examples here.) But not entirely. This is what drives the pattern:
- It comes at the end of a relatively extended uptrend (for the time frame).
- This trend shows some signs that the steam is running out. (In this case a small double lid).
- Against the old trend, a strong downward dynamic is developing …
And that’s where we’re stuck. In the best examples of Antis, the downward momentum is pretty extreme. Momentum indicators (not shown in this graph) are making new lows. In this case, they have not hit new lows. The diagram shows a clear change in character; It’s not entirely clear on this map.
Because the shift isn’t clear enough and the downward momentum isn’t strong enough, I usually pass these trades on. But here’s yet another example of a trade that extended into another clean move to a measured move target (which would have gone through a 1R profit target!).
I don’t know what the answer will be as we as discretionary traders need to have some guidelines on when a pattern meets the criteria and is worth risking money – when a trade is “good enough”. While rules and guidelines are important, we also need to respond to subtle changes in the market as well as in our own trading and perception.
So … here is a blog post with no answer but just one question. This is something I will continue to think about in the coming weeks and maybe write a follow up post at some point!
(FYI, our MarketLife members Already had a lot of short USD exposure, with trades in EUR, GBP, CHF and CAD. That was another reason I skipped the trade – I had reasonably correlated USD risk on my account, but that doesn’t change the fact that this pattern may be due to careful deliberation and verification.)