Why do you think this trade went wrong? - Trading with Foorprint charts

Trading and Investing Helping Traders
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Hello Everyone!

I took a short position today as shown below. I unfortunately got stopped out as the trade didn’t go my way. I’m curious to get some opinions on why it turned against me. As we were trading at resistance, I saw low open interest on the offer side; 58, 12, 3. A couple selling imbalances, COT (highest volume traded within a bar) within the top four ticks and not very high delta. This showed me that there was strong selling pressure.

I understand I can’t get every trade right but is there something glaringly that I missed when taking this trade?

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Yes, context. The 4100 big whole number magnet above is enough reason to avoid taking any short trades (plus the market had already pushed to 4098.75 on MES and 4099.00 on ES not too long before this so only 4-5 ticks to go). Watching how the market actually interacts at support and resistance is more important than just being aware of potential turning points. The market was also making higher highs and higher lows during the session despite the fairly weak three legged move down from the bears (which wasn’t able to take out the session low), so more bullish than bearish in that sense too. The bull channel up to the point where the short was entered was relatively tight which also decreased the probability of a profitable short, unless entering with limit orders at prior highs, scaling in higher, and scalping which is not a good idea in this market (and not a good idea for new traders in general). The market overall has been extremely bullish. Given the strength of the bulls over the last week it would be likely that they’d want to get a strong close on the day and week so my expectation coming into the session was that we’d likely end the day higher. 4112 area was also a major measured move target looming above based on the daily chart but I didn’t think the market would push there so quickly.

On the footprint chart specifically, look to the left, there was nothing that really stood out about the POC where you entered versus what came before. The stacked sell imbalance near the low of the bar two bars prior showed that sellers were aggressively hitting the bid but they got nothing for it.

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Thank-you for the response! This really helped.

Question; do whole numbers really matter that much? As in market always wants to gravitate to a big round number?

When you’re looking for an auction reversal. What do you need to see for it to happen?

Thank-you :slight_smile:

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It’ll be beneficial to your trading to break the habit of thinking in absolute terms. The market is a probabilistic environment so things don’t “always” occur a certain way, but behavioral tendencies that repeat often enough do warrant attention.

The context on 4/9/21 showed far more buying pressure than selling pressure up to the point where your short trade was taken so the whole number was a significant magnet to keep in mind since it was a logical place for the market to try to go. Again, higher time frame awareness, how different market participants are likely to behave and interact in different circumstances, and how the market had been trading in general over the prior few sessions was important too.

In terms of reversals, as with everything in trading, many factors are taken into consideration when making decisions. There isn’t a simple answer. Depends also on whether we’re talking about major trend reversals, pullbacks, reversals in a trading range, and so on. Even then I don’t know that something will happen, I am just assessing probability, risk, and reward and take trades if I think it’s likely to be favorable to do so.

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Couldn’t have said that better.

The lack of thinking of each trade in terms of probability is what could potentially lead a trader to stop trading the system even though the setups could have a positive expectancy.

Well said @Trader

Matt
Optimus Futures

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Thank-you both. I’ll be looking at higher timeframe participants. This was very insightful! I finally did settle on a trading style and have started to see some positive results these past few weeks. Hopefully moving in the right direction.