Trading Nasdaq futures (NQ) short this morning resulted in a profit of 10.25 points or 41 ticks. The setup was one I had been tracking since the coaching sessions at 6am. The possibility of going long was prohibited due to the Stochastics being at the point of overbought on both the 5 and 15 minute timeframes. Therefore, patience was the key in waiting for price to prove that a resistance area strong enough to sent price down had been found.
The 15 minute chart was now overbought. The 5 minute had closed below the fast moving average, formed a bullish bar, but could not manage to maintain price action above the fast moving average. Instead of forming a second bullish bar, a bearish bar was forming. This coincided with the 1 minute chart showing a hidden bearish divergence.
After entering the short position, I immediately set a profit target at 7628 (a few ticks above the ATR on the 5 minute chart). Now there was a possibility of price going down to the ATR on the 15 minute chart. However, more than likely, price would hit the ATR on the 5 minute and bounce before going lower.
A few minutes after the market opening, the limit order was filled with a profit of 10.25 points or 41 ticks.
Although price did go lower, 7617.25, then immediately bounced up to 7648.50, which would have taken me out on a stop. In other words, if I was greedy and wanted more, I would have given my profits back to the market. During these radical market waves, taking profits is a much better solution versus holding for more profits.