$XLE Entry and Thoughts

Tomorrow I'll write about learning diagonals when trying to understand a chart. Today I will be brief and talk about my entry and a new mantra.

I entered the contract at 10 AM, I waited because I'm learning about the 9-10 am window. Learned that overnight orders get filled, this is when some sellers sell or buyers buy. This window does not offer the most stabilized price for the day.

Here was the original contract from yesterday before purchasing it:

• Buy Call Option for $55 expiring on March 6
  • Current contract tonight is $1.02
  • Break-Even is $55.88
• Stop loss price will be 25%.
  • Contract price = $1.02 -25% = $0.76
  • $XLE price = $51.90

This morning, $XLE opened at $52.34, which was lower than yesterday's close. The lowest price observed was $51.44, this was lower than my original stop loss. I would've been forced to exit the contract and I would've lost way more than 25%.

Instead, I entered when the contract price was $0.67 this means that my stop loss has moved from the original. My new stop loss is $50.70, I have so much breathing room, and I actually feel okay about this; this has lessened my emotional stress. Yesterday I mentioned being nervous and having anxiety about what today's performance would be post entering the contract. The main reason I felt this way was because I felt like I put in the work and I wanted it to be worth it. So, with that in mind and my entry, here's a mantra defined:

"The market doesn't pay for working hard on analysis; it pays for entering well"

So, let's analyze this a bit with the new support and the RSI observed today

• We established there is a new support and we have seen today that even on a "red day" $XLE closed way above it.
• The RSI was nearly 80 yesterday, but we saw a major pullback today, which I expected. So while $XLE didn't reach the support price, the RSI remained rather stable. This may point out to a very good entry based on analysis from previous wins, when I didn't know what I was doing but the entries were good.
• Although I didn't sketch in this chart, you can see that we're starting to see some higher lows, we started seeing this in the afternoon. Based on the current pattern of this stock, it may be significant.

So while the prospects look great so far, nothing is guaranteed. I'll be tracking its performance until we either exit or take profit.

Entering a trade with some knowledge from previous wins/losses feels safer, sitting and analyzing before entering a trade has also felt safer. Of course, I did experience a bit of FOMO, but in hindsight, it's showing me why it was a smart move to just wait.