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Today at the open, I was watching the market internals and price action patterns and wanted to see if we could scalp a quick 5 points on the S&P 500 back to yesterday's low. From there I wanted to see rejection and possibly lower. Hindsight is always 20/20 and I completely goofed on this trade and it cost me $1,800 in about 25 minutes! Let's take a look at what I saw and what I did wrong and if I could turn it around. 

This is what the chart looked like at the time. We hit a low point and looked to reverse. If I were to follow my rules, would it have provided me an opportunity to scalp this back to yesterday's low? That was the idea and let me show you what needs to happen and what I ignored. 

1. You need proper pullback each wave to be valid
2. Know your levels and targets
3. Proper entry techniques and RSI levels. 

As you can see below, I didn't follow any rules except knowing my target. The 78.6 level you see was an indication that we should be headed lower. 

After entering improperly the market reversed and I need to look at risk/reward and whether or not the trade makes sense and if my stops are too tight or too wide. In this trade, the reward potential was around $300. If I put my stop below the last pivot, I could've had a loss of around $500. So a decent risk/reward. However, I used a wide stop that but me at a risk of around $600. I entered into a 3 lot position and got smoked!

After the tight stop area was hit, we consolidated, went lower, retested over that spot and fell again. I completely ignored what was going on here, hoping to get back to break-even or eventually hit my target. Once my stop was hit and I took an $1800 loss! I could've cried and curled up into a ball but instead, I looked for another opportunity to turn things around. Not revenge trade but to follow the rules when the next setup took place. It wasn't too long after that and at the end of the day I'm up $400 which is typically my daily goal to pay my bills. 

 Our community of traders, several were short the SPY, QQQ or futures, whatever they trade. The set-up was obvious. Remember that 78.6 level earlier? That was clue #1 that we were headed to the cheat code at 127.2. I even had that as support level in the chat. I quickly entered into short positions in the /ESM8 and /NQM8 to recover and we hit the target at $2592. The bottom tick was actually $2591.25. My bad for missing it by 3 ticks. I could have looked for another reversal opportunity higher after this but being up my daily goal to pay the bills, I called it a day. Of course hindsight again shows that the reversal was there off that level and we could've played both ways! Look below where we hit our target lower after failing the 78.6 and reversed. This play has been money on futures lately but I was too blind to see the bigger picture this morning and it almost cost me! Hopefully this helps in not what to do when futures trading! Any questions please leave your comment below. 

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If you are interested in receiving discounted commission on your futures trades, free access to Live Squawk and learn more about the newest platform about to be released then go over to our page HERE and let us know more about you. You'll receive our chat access for the entire month of May, our webinar introducing the latest platform by KnowVera and meet the Phillips Capital team. 

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