I'll Enter the Re-Entry Discussion

I have been asked to talk about re-entry. Re-entry or continuity trades are just trades with the trend when the trend goes on longer than you have contracts left to scale out.

As it happens, today is a perfect example, hence the post today.

I have posted a screen shot of Kiki's FloBot with a bunch of these types of re-entry trades today. The FloBot code is quite modular having several different trade setups, but the trades I am showing today have all the other modules, except this type of re-entry, switched off for clarity.

What Kiki and I have done with her FloBot is to take profit early rather than run the trade so that it is forced to look for another trade,and you can all see more trades in the sequence.

To re-enter a trade I need to control the risk of re-entry as there is no point in just giving back the profit I made. My method is to require Order Flow to be strong. Then I just wait for a pullback with the long term momentum in tact and the shorter term momentum which changed in the pullback, to be re-imposed in the same direction as the long term momentum and order flow. Sometimes the pullback is not as clear because you get a horizontal congestion and then a continuation. The other thing to watch is the "rule of three". I am wary after 3 pullbacks and require stronger evidence of continuity. I usually get this from looking at the Profile to the left of where price is trading to find a zipper or gap or even very high volume VA with no support closer than my first proposed scale.