Rules of Engagement. My fishing lines are based on getting picked up on a triggered momentum break at the point of the break, I do have rules for what constitutes triggered momentum but that would confuse or bore most, so I won't go into that. Because the market likes to bounce back and forth for different stages of finding the end of the move, target low or high depending on the momentum direction. In todays case, the hard down move hit my 1st target where I had my deposit orders waiting. Since there were 2 more potential lower targets, the second is usually favored to put an end to a momentum move and usually is setup by a kneejerk reaction to retest the original trigger point at the 75.25-75.35 area.

Generally a it takes two 60 min bars to complete the process of finding the ultimate target for a triggered momentum direction but there are variables that effect the process but a mechanical system does not allow the time needed to analyze all of those variables. So I play the percentage factor for the 80/20 general probabilities with the pattern picture I have to work with. This is where mechanical damage control also needs to be used religiously. If certain things start to happen outside of the 80/20% norm I have no other choice but accept the probability that I am not dealing with the norm which makes my choices wrong. Shoot first-ask questions later in these types of instances, keeps the pain from doing monetary and psychological damage.

Today I choose to play the potential setup for the second 60 min bar to go slightly lower than first low. This would give a kiss to my 2nd downside target at 74.40. The second target generally has an 80/20 chance of getting hit. Today the market played the 20% failure card but I barely recognized in time that the market was set on taking a donation from me. I'm not always this lucky to avoid the donation call. I don't always trade the potential second stage drop unless I don't have other areas to focus on. Today, as the market bounced back to my original trigger point at 75.30 I was quickly accessing whether to sell again or relax. I did sell at the beginning of the second hour which looked good long enough for me to think I at least had a double bottom to look at taking a second round of profits. I was in the middle of my post when I saw a bounce started that should not have happened. I immediately said goodbye to one at breakeven and no sooner had I gotten the fill, I was gripped with panic by the higher extension I saw shaping up. I seldom use market orders but this was a time to shoot first-ask questions later. This time my panic instincts served me well, the prime directive was correct, waiting for my stops to take me out would have meant giving back most of my first deposit.