This content is restricted to CTU members
Today we put together a trade plan on the SPY 5 minute based on an alert from the chat room. The alert was ‘indecision at important real estate’ which is concerning the 200 sma. We poll the room to see where people’s entries, stops and ideal targets are. Those who entered around the moving average were filled and some also mitigated risk by taking profits on a portion of the trade. After 15 minutes we see the trade go against us and stop everyone out before rolling back over.
While human psychology would tell us ‘darn this thing… didn’t work well the first time now I’m going to look at something else’ when in reality after an hour we see another nice trade setup forming. In the first 5 minutes we are profitable and within 30 minutes we’ve reached our main target! Now the question is, do you take all your profit at that predetermined point or do you trail your winner? We ALWAYS trail our winners because it leaves us open to the possibility of a home run. If you truly believe ‘profit is profit’ you will NEVER hit a homerun. Sometimes the market will continue to run in your direction and your job is merely to ride that until its logical conclusion using any of the methods discussed (moving averages, previous high, etc).