Thread by @TradetheMatrix1

$BIOR fails to do HOD clearout
$BWEN completes HOD clearout

Same type1 setup, different delivery. Recognizing the pattern is only first small step, edge extraction goes far beyond just pattern recognition and it's why it's a multi-year process often:
#smallcaps #trading

1.

In smallcaps more than other markets you often have smaller ranges present which makes it more difficult on edge because the max RR is more capped. Details on how you execute setups start to matter a lot more because of that. This is absolutely key to understand.

2.

Figuring out through details which setup is bit more likely to fail vs the other matters because of low ranges. 5-10% add on failure recognition might matter over long run. It doesn't matter on high time frame setups where liquidity and range is great, but intraday...yes.

3.

For every pattern or setup you need to specialize figuring out as quickly as possible when failure is on. Majority of education focuses on recognition only which is false. Quick failure recognition is more important. Why? Because edge is thin anyways on most patterns.

4.

"Quick failure recognition" is measured in price distance relative to structure of pattern. If you use highs and lows as failure recognition that can be too far already. Mid points are where the invalidations already happen if you study over large sample base.

5.

Study your patterns over large sample base and focus on failing patterns only to see if you can quickly spot their earliest sign of failure. It won't be super obvious but many failing setups do share something about orderflow that prones them to fail. Find what that is.

6.