End of first trade, start of 2nd

Another Head and Shoulders Top

This is the tick chart again. I honestly don't know how people trade without a tick chart. It measures orders coming into the system rather than by time intervals.

This chart shows a head and shoulders top, which is very common in soybeans trading. Head and shoulders tops weren't one of my favorite candlestick patterns, but they work because they show a marked change in both sentiment and the underlying trend. The green arrow is the position where I exited my long position (prices crossed the dotted yellow Bollinger Moving Average line, which appears almost white in this screen capture), and the bottom of the red arrow is where I entered my short position. The green arrow was also the place where prices crossed the 8-period EMA on my 3 minute chart. I am a little worried that this pattern is showing up so early in the trading day. It may suggest other unexpected events later, perhaps a consolidation(?). I need to be prepared for more unexpected or difficult conditions. If prices go flat, I won't take a new position until a new trend becomes clear. There are times when NO position is the best position.

(Sorry, but Tradestation doesn't really have very good arrows in its software. In the first few days of my blog, I attempted to add better arrows and explanations using MS Visio, but it was too time-consuming, so now, I just use the Tradestation graphics and provide explanations textually.)

Trading Multiple Contracts

One of my emerging trading habits is to trade contracts in even-numbered blocks (2, 4, 6, etc.). As soon as the first signs of a turn in the opposing direction manifest themselves in the Klinger indicator, I exit 1 contract, taking my profits. If this indicator turns before the position is profitable, I exit both contracts. However, by taking profits on one contract and leaving the other, I am providing myself with a profit cushion, and I am leaving a longer-term position in place for the continued rise in prices. There is one problem with this, however: in a rising trend, I can no longer take short positions, even temporarily. Thus, it is a somewhat double-edged sword. I am not sure which is the more profitable way to trade.

In an overall bullish trend, I will NOT take add-on positions after my original short position. Retracements tend to be short-lived, and are not worth the additional risk. Thus, my risk is more limited and positions tend to last for shorter periods. I am quicker with the exit trigger, so-to-speak, on a retracement.