In excessively extreme retail sentiment situations, there is often a decrease in the spread between longs and shorts
There are basically 3 ways to do this
1)New bullish momentum, forcing to close many open shorts
Even slight increase in lengths (IMO, longs opened too late, fewer chances of success)
2)Price in range with practically no movement (or very slightly bearish) giving the impression that the price has found support after the last movement
Slight change in retail sentiment, closing shorts opened since yesterday and opening longs awaiting further bullish movement
3)Situation similar to 2), with practically no movement, and with some volatility with news or in the European opening,powerful bearish movement in H1 candle
Less common option (feeling that many retailers have been 'saved', but that sometimes happens in such extreme situations)
Considerations:
➡️They are the options for a retail difference decrease between long and short (by 1) and 2) retailers are screwed), because that's my main thesis right now
➡️The option of increasing that differential a little more (extreme retail pain) with some more bullish movement until probably ending the OPEX, obviously, is not ruled out
Conclusion: the best medium-term trade recently was to go long since the beginning of November, the uncertainty now is a consequence of that previous bullish movement
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As part of these nightly tweets that I do these days ... today:
THE BAD TRADER
The bad trader makes a series of generally known mistakes, today I will try to delve a little into mistakes generally less obvious to some traders 👇
1)The bad trader chases the price, always follows the price in the markets movements
2)The bad trader denotes excitement on the days when the market makes important movements, loses control over itself
3)The bad trader overreacts to market movements (generally bullish), leaning rapidly (see point 2) to movements opposite (generally bearish) to the important previous movement, usually with too optimistic (unreal) expectations
Some explanations using the latest proposed bearish trade
Probably some traders do something similar, or will do it in another way, they may even disagree...
It doesn't matter, it is just my vision and I think it can be a help for other traders
(2/16)
CHART 1:
Simply the evolution of the trade and all the zones and indications proposed
Highlight Moment: When TP1 hit and price rapidly bounces, a common temptation is to expect a strong bullish momentum, in the session and in the medium term
Reality was very different
(3/16)
LOOKING FOR THE BEST POSITION
(associated risks)
➡️Option 1:
Too close to the bullish option, apparently better positioning, but more chance of failure
There is no significant reference level above
(Remember that for me, above 15760 DAX should reach 15850/900 easily)
This is a time when many of you think, after a 150 point trade (respecting my TPs), that you have to continue in the market ... some thinking about bigger falls, others about buying the bounce, right?
For me, here are three long-term psychological failures to be consistent:
➡️Overtrading
➡️Too greedy
➡️Chase the price
For me the main move is done, all TPs reached and the probable intraday buy zones have too much risk in this market situation (understanding the market context is very important, and very difficult too)
In fact, first buy zone is broken (15550),and the second is far away (15409)