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Chapter 36, Part II. Scaling In. Page 2

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 28, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    As you understand we have to add to original position only if our context still holds, but we have different possibilities to enter. Let’s take a look at it with this particular example:

    Chart #1 | EUR/USD 60-min

    Wow! So much different stuff here…

    Commander in Pips: Yes, it’s a bit overload with details, but we will move through it step by step. Particularly, I will give you clue questions and hints and you will have to move through it…

    Pipruit: Right. I’m ready.
    Commander in Pips: Let’s assume that you have solid bearish daily trend (chart is not shown here) and you search for a possibility to enter short with the daily trend. Once you’ve seen a combination of Wash and Rinse pattern of previous 1.3375 low, that was combined with MACD bullish divergence and a bullish engulfing pattern. Then the hourly trend has turned bullish and retracement just has started – you see only the engulfing pattern. Tell me, what pattern could be trade here, where its invalidation point and how you will enter here.

    Pipruit: Well, I see your help on the chart directly where you write Gartley ‘222’, but I could know by myself. Since this is a “222” sell, its invalidation point is the high of the initial X-A swing, i.e. 1.3496. Also I suspect that the 0.382 retracement is too close, based on the engulfing pattern. The minimum target is the length of the bars, hence it will be higher than 0.382 resistance. Probably I will write in my trading plan to enter slightly lower 1.3438 0.618 level, particularly around 1.3420-1.3425.​

    Commander in Pips: Why?

    Pipruit: Because I see Agreement of 0.618 AB-CD extension 1.3427 target and 1.3438 0.618 Fib resistance level. I will place a stop above 1.3496, let it be 1.3515 level.

    Commander in Pips: Very well. And why do you decide to enter right from 1.3425, maybe the market will move higher? Besides, see the nice up bar right before hitting your ENTRY #1 order?

    Pipruit: Hm, difficult to say. Probably I just do not want to skip the entry and take part in daily trend. Since I do not know if the market will move higher or not – I have to enter here and place a stop so, that could let me out if my entry pattern (“222”) will fail. So, trading plan gives us only 1 combination – entry 1.3425, stop 1.3515.
    Commander in Pips: And what will happen if the market will proceed to AB=CD 1.3462 completion pattern? Will overall our entry context fail?

    Pipruit: No. Our invalidation point is 1.3496. Hence, any level before it will remain as a “222” in progress.
    #1 Sive Morten, Dec 28, 2013
    Lasted edited by : Oct 14, 2016
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