I’ve been a bit lax about analyzing the open swing for stoxx & bund lately. And I paid for it today.
I was short before the open but scratched +1 because I didn’t want to hold a loser into the open. At the open I saw price stall at my level so I went short. Then it poked up a few ticks more and I went short again at the NVPOC. This was in my plan. Using a wider stop was not and I paid for that mistake.
However after analyzing everything, the opening type is clearly open drive as it did not go down even 1 tick from the open. And thus I should not have been shorting anything. An open drive should not be faded, especially at a nearby level because there is not time for buyers to get exhausted.
If, on the other hand, we have an open auction, then price will trade back through the open a few times and we can trade both sides.
Thanks to Jim Dalton & FuturesTrader71 for teaching me this important concept. Another day, another mistake, and another lesson learned. I’ll add this to my trading plan so that it doesn’t happen again.