My trade of the week, 13/2024 - $DIS parabolic reversal
Biggest winner for a while. Breaking the rules.
How I found the stock
$DIS was running up for several days, extending away from the 9EMA.
It was 6 candles up on the 5-min chart, making a smaller last candle.
The PSAR indicator was above the 11EMA, coming closer to the smaller and smaller candles on the 1-min chart.
Entry rules
I must say that I do not like trading all-time high stocks for reversals, as they are less predictable. On this day I have not found anything better looking for a reversal.
I like to wait at a fake at 10:00 AM using the overlap method. Which I failed. I made a mistake here, not waited for the fake candle I usually wait for. Anyway, I entered when it showed weakness, breaking 123.50 which was a very soon entry. For novice traders, I would recommend to wait for the high volume candle (HVC) vs low volume candle (LVC) engulfing candle pattern to enter.
My sooner entry allowed me much higher risk/reward ratio
Trade management
Target 5R, VWAP or 50% retracement of the previous move, whichever comes first is usual, but I saw higher potential here so decided to target the 50% retracement which was the furthest target
Move stop to BE after 1R move
Follow PSAR to exit the trade, which I also decided not to follow as PSAR was so far, and we did not reach VWAP yet.
The PSAR exit would be better than the one I chose - I bailed at which i believed was the 50% retracement bounce, when it broke the previous candle high on 1-min chart.
It was a mistake which cost me 1 more R of profits.
Anyway, the move gave me 6R profits. I can say that I was rewarded for breaking the rules. This time…