Friday, March 16, 2012
First bar: doji - Tight days.
A doji first bar can give a diverse range of days from tight ranges such as today to large trend days and wide trading ranges.
A tight day such as today is extremely dangerous to trade if your first target is 2 points or larger. Halving your target is poor risk management since you cannot practically also halve your risk. So a 6t risk with a 4t profit potential requires far higher probability of success and even then the rewards are usually not worth the pursuit.
Any trend attempt that rapidly degrades into doji bars (b16-20) should always raise suspicions of poor trading action and you should sit out until the bars become normal or price breaks out. Most bars after the initial move were in a 3 point range and the probability of success of price action entries is extremely low so its best to sit out.