As a retail trader it is very difficult to take such entries
Prima facie - Yes. But its not an absolutism. It would depend upon your approach. For e.g have a look at DLF cash data of 14 Aug. Almost the same exact manoeuvre played out from 113 levels. If viewing only a single short term timeframe, an entry near about that level would have been fairly 'foolhardy', considering the layers and layers of resistances to be negotiated upwards. However, the longer term timeframe did provide the clue that DLF was in a pullback from a nascent uptrend and that the 113 level was, in fact, a fair step upwards from the last support. I entered long at 113.25 (wouldn't try to hide the fact that it was not without misgivings
, notwithstanding all the rational analysis, as the market volatility did not engender much comfort). The trade did work out. Very well, in fact. BUT that's hardly the point!!
The point is that it was simply an assessed anticipated wager on probabilities and not the absolute foreknowledge of the fact that a large entity's orders would be there in support of my trade. AND herein lies the difference!!! The large entity would enter such a trade knowing fully well (as much as 'fully well' can possibly be defined in such a dynamic scenario) the pending orders (read liquidity) environment, and thus the lay of the land!!!
But do you think we retailers are providing liquidity here? Our stop loss and breakout orders simply feed them?
Not only we, but anyone else on the wrong side of the trade whose market moving ability would be significantly weaker (monetarily as well as technologically in terms of tools at disposal) to directionally resist/ counter the large entity's market moving ability
And that's how the game is really played. A crafty entity with sufficient firepower can literally sculpt the market price volume landscape into the pattern of its desired trap!!!
Can we avoid this changing our entry and Stop loss tactics? These are the questions to be answered
If I may say so without any intended offense, you are looking at the problem from the wrong end of the philosophical telescope!!!
This is not about tactics, this is about strategy!!! It all basically comes back down to the fundamental definitions - From where it all began, in the first place
A support and resistance level can only said to be so when it does its job. A trend can only be qualified when price breaches a defined pivot and holds above/ below it. Ergo, it is not the levels or pivots but it is the manner in which price volume action unfolds in their proximity, which is important
Hence in your posted examples,
unless the price action breaks through and then follows through until subsequent bar/ candle completion, the breakthrough is suspect and is vulnerable to trap exploitation!
Unless the price action retraces and then breaches the breakthrough bar's start point with subsequent follow through, the breakthrough failure cannot really be categorized!!!
Therefore, until the above mentioned '
unless' does not happen in either direction, are there really any compelling grounds for a sensible retail trader to enter the fray?!!!
If a trader follows the strategy of keeping his/ her powder dry until the resultant price volume action definitively tips the market's hand, he/ she would avoid being stoploss fodder for majority of the time, barring outliers. To be sure, he/ she would have to sacrifice leaving a bit of money on the table near the start of the move - But that amount would be made up in multiples by entering with more confidence, with a larger stake, for a (possible) longer run and by avoiding more false starts
P.S - In the long run, its all a matter of prospective perspective
