To Trade or Not-to-Trade

I normally do not work on Fridays, but last Friday I was quite tied up. Usually that is a bad call for trading or anything no essential for that matter. But still, I just looked at the ES chart (S&P 500 futures) in the morning. Last Friday market dipped towards the 50 EMA during the Asian session, and I saw that the market is sitting just on the EMA. I thought I could put in a buy-stop order just above the right range, and put a target just below R1. But then I thought, its Friday, and usually I am monitoring the market closely, I do not enter a trade on Fridays. Too much random stuff happens on Friday on low volume, and I don't like that.

So What?

The chart above shows, that if I have entered that buy-stop order at 3480, I could have easily exited at 3500, which is just below R1. Should'a, could'a, would'a..

Then during lunch-time, I saw that the market corrected nicely from the highs again, the chart above shows a perfect 'key-buy set-up' which is just a fancy name for a reversal trade.

Market rallies
Comes back towards its EMA with a few red candles
Forms a reversal doji candle
Next bar is a green candle, as as it clears the high of the doji bar, you buy
Stop at the low of the doji bar, and target either pre-medidated 10-20 point depending on your position size, or just near the high of the day

That is the bread and butter key buy set up. It is a high success rate trade set up on a trending market. However, it doesn't work all the time. Today on Friday, as I saw it that is what I was thinking...

When it fails

So I didn't enter the trade. Because Friday afternoon is a bad time to enter any new trade. Due to low volume volatality lot of the set up fails during late Fridays. That is exactly what happened.

The first red arrow above is the buy set up I was talking about. However, it failed immediately after the entry (if I have entered, I didn't). The trade would be immediately stopped out, as it violated the doji bar low. Later it gotten support from the EMA below and rallied. However, it failed to make a new high. The pattern broke just above R1, the second red arrow; and the market sold off hard during the last hour. So much so, that it could have been a good trade on the short side!

Disclaimer: This is NOT professional advice, this is all just my own opinion and experience. I am NOT a Certified Financial Adviser. Consult professionals for any financial, accounting or legal related questions you have.

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