One BO, different entries and it's psychology!
As a breakout & retest is complete, it gives the best scenerio for entry with compliance to the rules of money management as RR ratio and position sizing are considered as major components while entring a trade for a trader.
In this case, a low has been established at 665 which will act as a point for SL placement in the near future.
Types of traders entering into this trade:
#1. Agressive traders: These traders wait for a buyers candle to form after a retest on the trendline and as soon as the candle forms like in this case, a buy stop order at the high price of the candle is placed. This is a risky bet but this reduces the SL significantly while providing the best possible RR ratio for the position.
#2. Conservative Traders: Here, as the breakout is complete and the stock establishes a High (in this case 739.85(Doji candle High)) and when the retest is done, these traders wait for the high (739.85) and place a buy stop order at this price giving the safest possible entry in theory. Though this distorts the RR ratio a little bit as SL remains the same but the probability for upside is high. This entry works on the Dow Theory as Higher Highs and Lower Lows starts to form which indicates bullish view.
This is why it is said that trading is 20% execution and 80% waiting.
In this case, a low has been established at 665 which will act as a point for SL placement in the near future.
Types of traders entering into this trade:
#1. Agressive traders: These traders wait for a buyers candle to form after a retest on the trendline and as soon as the candle forms like in this case, a buy stop order at the high price of the candle is placed. This is a risky bet but this reduces the SL significantly while providing the best possible RR ratio for the position.
#2. Conservative Traders: Here, as the breakout is complete and the stock establishes a High (in this case 739.85(Doji candle High)) and when the retest is done, these traders wait for the high (739.85) and place a buy stop order at this price giving the safest possible entry in theory. Though this distorts the RR ratio a little bit as SL remains the same but the probability for upside is high. This entry works on the Dow Theory as Higher Highs and Lower Lows starts to form which indicates bullish view.
This is why it is said that trading is 20% execution and 80% waiting.
Feragatname
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