The Second Mouse
Often when you identify the “perfect
pattern” the price action moves along in uncannily predictable fashion. That
is–until you enter a trade.Â
Sometimes the market seems to watching you. It behaves wonderfully and
entices you with beautiful setups. Once you take the bait, however, it morphs
into a perverse malevolent creature that aims to do everything it can to ruin
your day.
From Friday’s action, I have a good example of this in TMP Worldwide
(
TMPW |
Quote |
Chart |
News |
PowerRating).
TMPW ratcheted up on this five-minute chart, breaking out from two
consolidations. But, after it conditioned you with its good behavior in the first
instance, it baited you with a false breakout to the upside (A), followed by a
false breakout to downside (B). That’s the reason many daytraders expect to get
faked out on the first breakout and don’t hesitate to enter a trade a second
time, knowing that the probabilities are in favor of the second breakout being
the real one.
As Jeff Cooper likes to say: “The second mouse gets the cheese.”
Have great weekend,