10/18/2013 – Why do perfectly looking 15 minute buy or sell setups fail?

TraderHank

13 years ago

For years I’ve been frustrated on why a perfectly looking 15 minute buy setup would roll over and fail even with the rest of the market powering upward. The setup could be picture perfect, with bottoming tail, at the rising 20 period moving average, at support or an area of 40/60 Fib retracement etc. and the darn setup would fail. I had to be missing something, I’ve been studying this for the last 5 years and really could not come up with anything solid or a trend to why my 15 minute buy/sell setups seem to fail more often than work.

Then, I had my “aha moment”, I’m one of these types that my mind is always working on a solution to my problems even when I’m sleeping. On the problem of my 15 minute buy setup failing, my mind has been working on this for a long while. When I was going over my notes a couple of weeks ago, I was looking over my IFT Market Laws, Market law #3 is Fibonacci’s law and I’ll quote what Oliver Velez has said many times during his training classes. ”If you don’t have a 3-5 bar swing, don’t do a thing”, I always took this as a non-trending market with random candlesticks, and overlapping bars with no signs of any recognizable patterns or like most traders would call “CRAP” can’t recognizable a pattern. Then it accrued to me that all of my 15 minute setups that seemed to fail were outside of this 3-5 bar range on the pull back. I’d have 3-5 giant wide range green bars followed by 7 -9 or 10 red smaller bars on the pull back, even though the pull back would still be in the 40-60 fib retracement the 15 minute buy/sell pattern would usually fail. I concluded that if the pull back is outside of the 3-5 bar range, the setup will most likely fail because in actuality price has a new trend in the opposite direction of the setup, which can be seen on the 5 minute chart or a lower time frame. I’ve also concluded that there is, what I’d call, a time decay that is happening on the longer pullbacks, as we are taught in The Pristine Method, Price + Time = Void, the greater the time the larger the void and the more likely price will continue in the direction of the pull back causing any rallies in the opposite direction to fail.. Aha! Since my discovery, I’ve been able to predict which 15 minute buys were going to fail with uncanny accuracy. So remember “if it don’t have the 3-5 bar swing, don’t do a thing!”