I almost nailed a morning short on LVS when it broke the first wedge. However, I was wicked out without giving it a chance to play out. One way to avoid getting shaken out is by getting in on the first retracement following the breakdown from 44. I was at a position of disadvantage when I chased the breakdown and executed at 43.92. If I had been more patient and waiting for price to breakdown from retracement, I would have been in with more size. I would have started a position as price zoomed to the break down level (500 shares) and then added (500 shares) when price broke down from the 2nd's wedge. This would have given me an avg. price of 43.95, which puts me in a position of strength as price followed through and my initial risk would be the top wick of the 1st retracement high of 44.06 (1 cent above it). I'm risking around 11 cents to make 35-40 cents on the first lot down when price tested prior day's pivot at 43.60 area. The prudent thing to do is to move stop to break even on another half (500shares) to just above the last break down area of 43.85 I'd go with 43.90. Then let it ride to around 43.10 and cover on accelerated down volume and steepness of decent. That last 500 shares would have netted me 75 cents or $375, plus $175 on the first lot.
Of course everything looks perfect in hindsight. But this is the kind of exercise that I must do on a daily basis in order to improve. The more I see it, the more prepared I will be when I see these kind of setups.
What I did correctly on the subsequent shorts (circled):
- Controlled risk and tight stop when the first break of trend didn't work out by having the mentality that "I can always get back in"
- Better execution on entry and exit would have saved more $$. I know I can get in at around43.64 and out around 43.68ish. and not losing 8 cents.
- Although I added when price didn't go against me, but I should only have added when price is GOING IN MY FAVOUR, not when it's forming a bullish wedge - again mental flexibility is key here.
The 2nd entry (2nd circle) should have been made with better execution and with adding:
- get in 500 on break of trend around 43.72 with final dead stop at the last high before breakdown at 43.86 (14 cent stop) but if it doesn't break down immediately, I'll observe the price action carefully and see if it's forming another bullish wedge. If it does, I will get out before 43.86.
- Observation should be made while allowing price to fluctuate and forming the first lower high for new downtrend line to be drawn.
- I would have added 500 more as price formed and broken the bearish wedge at 43.56 and covered most if not all on the sharp down move down to 43.40.
- Profit would have been 150 on the first lot, 80 on the 2nd lot.
A more brave way to let a third to ride as long as it's below the initial breakdown area where the first 500 were shorted. As you can see my target of 43.3 as hit on the 2nd down move. How did I get that target? It's where price broke out from the initial morning downtrend.
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