Second Chance Trades in ABC Bullish Pattern
April 16, 2012 4:04 PM

Second Chance Trades in ABC Bullish Pattern

Sometimes second chance trades from the same pattern are amazing.
When I get stopped out of my trades I continuously look for where the trade went
wrong and what I could learn from it. I document most of trades (specially losses) as
they are best teachers of the market. When pattern fails in the first pass but gives
another opportunity to trade, I usually never miss it. Today was such a case of
second chance opportunity in ABC Bullish Pattern trade.

This morning ES Sold off (compared to Dow went up showing divergence) from the
Open of 1375.5 (R1, Globex High Cluster) to 1360.5 (Globex Low and S1 Cluster).
Around 10.15am, it appeared ES made a low and started to trade inside the Fib. Bands.
This itself is NOT a signal as ES is trading in Volatile Zone and Volatility needs to
become normal for any trade-entry. ES traded above Mid Fib. Band and started to
retrace forming First ABC setup. I patiently waited until NOON for ABC Bullish
pattern to trigger. ES Volatility was still above RISKY levels. Around 12.02pm,
I have decided to trade Long ABC Bullish Pattern at the EL (1364.25) with a stop
at 1362.25. Around same time I also saw NQ was making an ABC Bullish pattern in
610 Tick charts. I thought they both should rally higher as VLTY becoming normal
and CMI is turning Green in 5m and 3m charts.

Pl. see charts in Chronological Order:
http://www.surinotes.com/index.cfm?pDate=20120416&CSEL=1001

12.20p: ABC Trade1 LOSS: After rallying almost 2 points form my entry, around 1220p, ES
traded back below my entry and pushed further to hit my STOPLOSS at 1362.25 (2 points)
loss. I was bit surprised as Market Internals were Green and VIX is trading within the
zone.

Next 20+ minutes I closely watched ABC pattern and its price-action to note the
pattern is acting well (uniformity) and Market Internals are still GREEN. ABC pattern has
expanded now making a low at 1361.75 (but not the ‘A’ Low 1360.75). I was
tempted to get back into the trade around 1361 but I waited for it to
trigger the EL (1364.25), same level as my First ABC Trade.

Around 1245pm, I am more confident of ABC moving up. CMI is green, VLTY Zones are
showing normal range. I knew second chance ABCs are great. I placed double size
contracts to go long at 1364.25. At 12.47pm, my trade was triggered and I have
12 Cars Long position. This time Stop Loss is set at 1361.75 (2.5 points). My
Targets are 1366.25, 1368.25, 1370.25. Wanted to recover my loss from first
trade at Target1.

1259p: My first Target was hit at 1366.25 +2 points (recovered loss on 6 Cars)
139p: Second Target was hit 1368.25 +4 points (3 Cars)
145p: Third Target was hit at 1370.25 +6 points (3 Cars)

I do like second chance Trades as they are the best trades, specially after a loss.
This rebuilds my faith and confidence in trading my 2nd Chance trading patterns.

Comments

One Response to “Second Chance Trades in ABC Bullish Pattern”

  1. Joginderbajwa on April 26th, 2012 4:39 pm

    I would think that the same holds true on daily charts of equities as well. For example, your charts of SOHU, GS and OPEN, all have 2nd ABC pattern entries. Perhaps you can share your experience of 2nd entries in ABC patterns with a few specific examples.
    Many thanks.
    Joginder Bajwa