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18th September Trading Recap (and the benefits of a Play Book)
I normally only trade Wednesday, Thursday, and Friday but I do tend to look at the markets toward the end of the day for two reasons

  • to continue my narration of the market (I find it helps to read the market as an ongoing story)
  • to see if any of my setups and plays have formed so that I can pretend/imagine what I would have traded, and fantasize about what profits I could have had

And I was very glad that I have this habit.

Rollback to Friday 15th

For the entirety of Friday's regular UK trading hours, the FTSE 100 was in a large range. However, right at close, the market sold off very sharply and broke through its support.
It gave a beautiful flag formation as an entry, or even the tiny Tail Bar at the retest if you were so inclined.
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I'd ended my trading shortly after 3pm that day to go and pick up my boys from school so unfortunately missed that setup; I love my boys but they are simply not conducive to profits :P

Returning to present day
I was doing my typical non-trading day analysis and saw the exact same market play on the NASDAQ this evening.
It didn't consolidated for the entire day as the FTSE did, but 3 hours is still considerable. It was also preceded by an uptrend, broke down with volume, and showed us a very similar pull back.
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Now, the market hasn't pulled completely back to the range's/consolidation's support, but it did pull back to the next available 1hr Key Level.
As soon as that Doji was broken to the downside, I was in and looking for a 1RR.
Normally I would look for at least a 2RR on a play such as this but there three mitigating factors:

  • market close was imminent
  • the pull back was fairly shallow (purely subjective and based on opinion/experience)
  • we were very close to a seemingly strong support area (market-open price and its earlier retest)

Thankfully, it worked out fairly quickly in my favour.

Post-Market Note
The 1RR was a solid decision. The support area really did support and as of right now (21:15 BST, 15mins after market close) price has popped right back up the consolidation.
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Too late in the day for me to look for another one but if there's a convincing reaction here it will be worth recording for future reference

Play Book
If you're a sports fan, you may be familiar with a Play Book.
For those that aren't, a Play Book is selection of tried-and-tested strategies and tactics that excel in particular situations.
For example, if your opponent is employing Tactic A and you know that Tactic X has a 80% success rate against it, you go with Tactic X.

This is also the crux of successful trading.

I know, based on experience and data, that if price consolidates for as long a period as it did on Friday and today, and breaks with volume before pulling back to a 1hr key level, then the odds are in my favour and I need to be ready to pull the trigger.
Does it always work? Of course not.
But it works often enough for it to be one of my favourite plays that makes me giddy when I see it forming.

If you're new to trading, don't rush out to make a playbook; it will come naturally with time spent watching the market and analysing your past trades.
But make sure that you absolutely do make notes when you encounter situations that you recognise because they will become invaluable to your trading.

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