Trade of the Day: Bailed out of a wrong position

I’m starting a trade of the day series in addition to my daily day trading report. This is to highlight a particular good or bad trade of the day where I think it’s worth documenting.

In this trade, both my CCI and Kelterner indicated a sell. So a double confirmation. So I waited for an entry by looking at my fast time frame. On the fast time frame, the price has been in Stochastic overbought zone for like 20 bars. Then a double top came outside of Keltner at price $699.60, which is just below the $700 resistance. So I entered a short near the top, which made a triple top and placed a stop just above $700.

A few seconds later, it broke through $700. Not good. It seemed to me like the MM are eating up the stops. So I moved my stop up above $701. I was quite certain that the price is going down…

After just passing $701, the price started to go down as expected. However, it was more like drifting down and coiling up rather than a fast breakdown. The stochastic was choppy too. So I wasn’t so sure anymore and decided it’s better safe than sorry.

I exited my position at $699.50 (local low wa $698.60) when the Stochastic was going out of the oversold zone. Soon afterward, the price continued on its run for the day. I was very fortunate to have at least made back the comissions.

Lessons from this trade:

1. Placing stops just above weak support/resistance could easily get taken out.
2. If the price hasn’t moved as intended, then re-evaluate the position and cut loses if things don’t look good. There’s always another chance.

Related posts:

1. Gold closed short position: +>$1000
2. How to stockpile a trade position one step at a time