A Redemption Day: Learning from Past Mistakes and Riding the Waves

1/9/23 Trading is a continuous learning journey, marked by successes and setbacks. Today, I want to share my trading experience, a day of redemption following yesterday's challenges. I approached the market with a different mindset, emphasizing the value of Price Pressure Momentum (PPM) indicators and focusing on strategic entries. Let's dive into the details of how this shift in perspective led to a successful recovery.

Overnight Price Action and Morning Strategy: As the London open saw a significant price drop, dragging prices down to the S2 level on the daily chart at 4770, I anticipated a backfill after the RTX day we experienced the day before. Instead of attempting to short the dips, I shifted my strategy to buying the dip back up to the 21ma and 10ma on the daily chart.

Strategic Entry and Confidence in the Trade: Entering my first trade at 4773, right as prices broke through the 10ma on the 5-minute chart, I considered the PPM values. PPM 1 was breaking through both derivatives, PPM 2 through its first derivative, and PPM 3 attempting to cut through its first derivative. All three PPMs projected an upward slope to a positive slope. Despite a temporary drop to 4767, I maintained confidence in the trade due to the positive slope of PPM 1 and 3 on the hourly chart and the demand line at 4765.

Wave Confirmation and Profit-Taking: By 10:10, prices were above the moving averages on the 5-minute chart, and all three PPMs were above both derivatives with a positive slope. As the waves unfolded, prices tested the 21ma confirming wave 3 then extending to a new high. PPM 1 and 2 reached their peak values, signaling a good point to take profits. I sold at 4795, capturing a 22-point move.

Afternoon Trade and Lesson Learned:

In the afternoon, prices dipped slightly during the lunch lull, testing the 200ma on the 5-minute chart but holding and returning above the moving averages. PPM 1 and 2 returned above their positive slopes. I entered a long position at 4798 with partial size, targeting a move up to R1 on the daily at 4813. However, within the next 10 minutes, prices reversed, hitting my stop at 4790 for a loss.

Understanding the Importance of Confirmation:

The key lesson from this trade was understanding when not to be early and allowing PPMs to confirm the trade. In this case, all three PPMs couldn't get back above their derivatives, signaling that the trade wasn't confirming as expected.

Conclusion:

Today was a redemption day, showcasing the importance of adapting strategies and learning from past mistakes. By placing emphasis on the value of PPMs and patiently waiting for confirmation, I was able to recover from yesterday's losses and end the day on a positive note. Trading is a continuous learning process, and each day presents new opportunities for growth and improvement.

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