So I spotted a bull flag break out and made an entry. Now I expected a back test. But as the chart shows, the back test failed on the 60 minute chart and I bailed out, missing the subsequent envisioned run. I got shaken out.
Now to be fair. The back test failed on the 60 minute chart — that’s not even my usual 5 minute chart that I normally trade on. Even the next bar struggled below the trend line for a while before resuming the uptrend. The red (black) candle was overwhelming. The RSI was also falling off from the 70’s overbought level.
To avoid potential shakeout I even bought 1 call option on the breakout. But I subsequently bailed that one out too on the same day, fearing the giant green bar preceding the breakout would get retraced somewhat.
I don’t think I did it wrong. It really depend on the original intend – day trade or swing trade, and how tight you want the stop order to be. If the original plan was to speculate and scalp, I guess I was excused; but if the original plan was for a more ambitious swing trade, then I could have given it a bit more room.
Option would have worked on this one and I most likely shouldn’t have sold the option.
BTW, the same just happened today on the GDX 1 minute chart trade. Got shaken out. This one had less excuse except it was a large speculative position (500 shares – already holding 100 for swing trade) and I had a very short fuse. GDX went on closing at high of the day at 58.40.
And last night NVDA reported earnings and it gap down big but then made all the way back to just about 52 week high. It reminded me of CMG on its earning, but CMG was still the most amazing because it gapped up big after hours, but then gap down big the following day before it retraced all the way back and more. This is one crazy buy-on-dip market!!!