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After discussing the pitfalls of hindsight accounts and how cruel it can be, we realize that we have to manage our risk in the moment and be confident in our analysis. Woulda coulda shoulda has no place in trading and if we talk like that too much we will start to believe it. The chart never lies.
Today we look at SPY on the 5 minute chart which forms a nice wolf candle at the 200sma. This makes for a great RvR trade to the short side. After polling the room and determining where most people’s entries, stop losses and targets are, we see that SPY makes a nice pull back and some have already mitigated by taking off a portion of their position for profit. We see that the next candle back tests our entry before continuing to move down. We trail our stop loss to continue locking in profit. We see that the chart eventually reaches our target before bouncing up and stopping us out. This is just a great example of a fantastic RvR entry setup. Obviously not all trades work out but if we keep the risk vs reward in our favor, the winners will pay for the losers.