Energy Sector about to Drop! Good Short Term Trade Setup!
Updated
Hey Traders, XLE is currently at a major level of Resistance and has a shooting star candle on the 1 hour chart. Also price is being rejected by the 20 period SMA. This is a high probability setup! Lets see how it plays out as there may be many things to learn from this trade..
Entry- 66.80
Target 1- 66.20
Target 2- TBD
Stop- 67.40
Entry- 66.80
Target 1- 66.20
Target 2- TBD
Stop- 67.40
Trade closed: stop reached
Unfortunately we were stopped out on this trade! This was a very nice setup that met my conditions and criteria for entry however price was not able to push any lower.. I did end up taking another trade on XLE as you can see from the main chart on this idea. After price broke above the blue resistance line ($67.50), my conditions and criteria for entry were met again therefore I entered a Long position at $67.85. My Target was reached shortly after that at $68.30.This is a good example of why you absolutely need to backtest your strategies and stick to your plan!. Even though I had a losing trade on XLE,
I know that this particular strategy has a 70+% win rate on this ticker over the course of 100 trades and has been a profitable startegy for years. Knowing every aspect of your strategy will really help your trading psychology and give you the confidence to take every setup that meets your conditions and criteria derived from back testing. I have found that traders who do not thouroughly back test there strategies tend to struggle psychologically. This is because they pick and choose what trades to take depending on there Profit/Loss! It is very hard to succeed trading this way. We need to know every single aspect of our strategies and continually monitor its performance. If a strategy has been succesful in the past and we are confident that it will continue to be a profitable strategy,
WE MUST take every single setup that meets entry rules! We dont know which trades will produce a profit or a loss, alls we know is that the strategy is profitable over the course of X amount of trades. I hope this was helpful! Message me or Comment below with any questions you may have and I will be sure to respond asap! Thanks Traders & Good luck trading!
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