Where to place your stop loss-a close above the
The big question in every trader mind, where to place my STP loss. most common trading strategy calls to place the stop loss above a SZ (Supply zone) or Below a DZ (Demand Zone), right that seems easy but its not. ask any trader & he will recount stories of price violating the SZ, & the stop loss is triggered the loss is carried (hopefully small) only to have the price reverse fortune.
This is exactly what occurred in this short trade on
GM
(General Motors); on the left hand side we have the long-term chart (W) & on the right hand side we have the trade chart(D).
The Long-term chart is clearly in downtrend. the price came into the Lower High of the (W) downtrend. a short was opened @39.20 with a stop loss above the LH of the (W) downtrend slightly above @41.00 many odds are in the favour of taking this trade.
What is interesting, on the right hand side, (D) chart, the price violated the LH supply zone & closed above the supply zone (The red circle); my trade plan calls to close a trade after a candle stick
* Violates a Supply zone by 10%
* candle stick closes above the SZ
Both conditions were met here, yet I did not close the trade & waited for a confirmation. yes i violated my own trade plan. Trading is fluid & my trade plan is ever changing. I closed the short today @32 mark. No permanent was made to my trade plan. but I took note of a price violating the SZ by over 10% & closing above the SZ but still the SZ held & the Short worked out.
This is exactly what occurred in this short trade on
GM
(General Motors); on the left hand side we have the long-term chart (W) & on the right hand side we have the trade chart(D). The Long-term chart is clearly in downtrend. the price came into the Lower High of the (W) downtrend. a short was opened @39.20 with a stop loss above the LH of the (W) downtrend slightly above @41.00 many odds are in the favour of taking this trade.
What is interesting, on the right hand side, (D) chart, the price violated the LH supply zone & closed above the supply zone (The red circle); my trade plan calls to close a trade after a candle stick
* Violates a Supply zone by 10%
* candle stick closes above the SZ
Both conditions were met here, yet I did not close the trade & waited for a confirmation. yes i violated my own trade plan. Trading is fluid & my trade plan is ever changing. I closed the short today @32 mark. No permanent was made to my trade plan. but I took note of a price violating the SZ by over 10% & closing above the SZ but still the SZ held & the Short worked out.