Previous Days Range 2/2

So basically what I do when we approach a previous days range, is consider a couple of different thing.

1. Are we in a gap opening? Gap higher? Gap lower?

2. Are we gapping in or out of the previous days value area? If we are gapping out of the previous days value area, we have better conditions & odds for a breakout. If we are gapping in the previous days value area, we have better odds for a failed breakout.

3. Where are we in relation to todays open? Above or below?

4. What type of open did we have? Open drive? Open test drive? Open rejection reverse? Open auction?

5. Who is in control? Other timeframe buyer? Other timeframe seller? Local?

6. Basically the same three questions FT-71 says you need to ask yourself all the time, What have we done, What are we trying to do, How well are we doing it. 

So while the concept is simple, if its a failed breakout, fade it, if its a breakout, go with it, the execution in real time is almost never simple. The ABSOLUTE KEY for making this play work is you have to be able to flip your position on a dime, and quick, you can have NO BIAS going into it or you will get killed, you have to be happy wither it fails or breaks. You have to be willing to admit your wrong really quickly, some days I flip my position 3 times in a matter of minutes before I get a nice trade off. I'm almost always looking to fade initially, because almost always the odds are better for a failed breakout, and return to previous value or balance, but I'm always just as happy if I take a quick loss, flip, and we breakout. So lets go over a harder example of a day I had to flip multiple times before I got a good trade. 

(the green lines are on the bars where the trades were placed)

Trade 1-short 97.50, got 1 scale off, then stopped flat

Trade 2-long 97.52, 0 scales, stopped flat

Trade 3 short 97.40, I think my best out was 100 ticks here