I've got an eye appointment that I need to leave for here but I want to mention something that's been on my mind regarding the "breakout". A month ago when I took my first A/U short position, I took the position just below the strong resistance line on the daily chart which was set by the prior to price highs of November 5th 2010 and December 30 2010. First mistake I made was not waiting for the resistance line to get hit before taking the short. I was already 100 pips too early. The waiting is the hardest part as TTR just mentioned. The second mistake I made was believing the price might turn around anyway even after piercing through the daily resistance. The third and greatest mistake I made was not taking the small loss, even at 100 pips versus waiting it out as I did for over 700 pips currently. A fourth mistake might be considered that where I went short, I should have gone long. Once the trade failed by piercing the line of resistance, I would be up some 700 pips now instead of down those pips had I gone long and held for this full month later.
Ok, so had I had the macd pincher visual to go by, I'd not have taken the initial short. Had I observed the relatively shallow distance to the quad tunnel on the daily chart, I'd not have gone short when I did. And just because the price was knocking on the upper bollinger line on the daily chart, there was no reason to assume that the bollinger would provide even a pullback, much less a reversal. Foolish trade looking back at it. Foolish.
So my the point of my post is this.....once the price moved above the line of resistance, that line became support and I should have gone long, using the line of resistance as the begining of a place to set a stop loss trigger depending on however much I was willing to lose based on lot size. Second point is this.....even if the price has moved up 600 pips from the quad tunnel on the daily, it can still move up another 600 pips or more on a "breakout"! Ok, I've made my point I think. Now to set it in my memory..
Alright, I'm off and away for a couple hours.
