My winning trades from today consisted of a short trade on Walt Disney. This share has been in a solid down trend since April and therefore I was looking for a short trade should the opportunity arise.
The opening first bar of the day was a large bear bar with a medium sized body with wicks either side of the candle. At this point there was not enough information to enter a trade. Although the overall bias was bearish and the price action of this first candle was bearish, there was buying pressure towards the end of this candle closing. Not enough information to know if this was going to move further down or move back to the upside.
Candle 2 was a bullish candle but had closed with sell side pressure, evidenced by the upper wick. This candle closed not much higher than the close of the first candle. My strategy now was to wait and if the next candle took out the low of that close of candle 2 I would enter a short position. I entered the trade.
Although my profit taking rules are to leave trades to run, in this case I took profits as shown above. The reason for taking the profits were because 1) it was getting towards the end of the trading session and 2) previous pivot high was now being taken out. I prefer to not hold equity positions overnight as the stock market gaps up and down like a yoyo in recent months.
Trade Clearly!
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