CLASSIC TRADE -- Double Bottom trade = $460 of profit
Hi,
How's your trading lately? I made a classic trade today, a clear double bottom pattern, it was simple as that; a classic textbook pattern that you can profit from if you identified it. Well, I am not trying to play down the risks involved here. Basically, when the double bottom is developing, you have to take a chance that price is going up. If price turned around, you've got to cut loss at the the low of the double bottom. There's a trade off here -- the sooner you enter the pattern, the more uncertainty there is and you might not be sure that it is a double bottom. On the other hand, if you end slightly later when the pattern is more developed, you risk having a wider stop loss and earning less profits.
There are no hard and fast rules here, What I tell my students is to base your judgement on support and resistance lines. If the low of the double bottom is at the support line, this gives you additional signal to go long. Watch how price rebounce from the support line too. A stronger candlestick is a good sign. For full discussion, please refer to Day Trade Emini For Regular Profits.
Mechanics of today's trade.
I longed one contract at 1710, and another two contracts at 1713.5 at around the neckline. Profit target was at 1720 and cut loss was at 1707. The trade lasted around an hour and hit my profit target, put $460 in my pockets.