<aside> <img src="/icons/reorder_gray.svg" alt="/icons/reorder_gray.svg" width="40px" /> How to know when to reverse a position? / Stop loss placement and when not to trail it. / When will inversion FVG fail?

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If you're bearish, you want to see down close candles be smashed through. You don't want to see any respect of that at all. That's bearish institutional order flow. ICT was looking if price would in fact violate the down-close candle confirming the bearish OF.

Initial short idea.

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Why did he change his mind?

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As soon as he saw the reaction of the +OB Opening price pulling back up, he knows he was offside.

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Closing the Short and opening a Long.

<aside> 💡 Reasoning behind the reverse entry:

We have the down close candle here that acted as what, the +OB, which was problematic for the short. He wanted to watch this get taken out to the downside on his initial short entry, but because it reacted off the opening price here, he was not interested in holding it. Instead he believed that it's going to run now for TGIF, which is the weekly range high and low up to that point, it can go up 20% to 30% of the weekly range because it's Friday, and we've had a nice bearish week. So it's going to want to go back against all those individuals that are holding shorts. This is a realistic, easy objective, low-hanging fruit objective. That's the buy-side liquidity on the day on Friday, so it's reasonable to anticipate going up there.

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💎Stop loss up into the opening price of this down closed candle. It need not trade back there. Why? Because we already had one, two, three times to it, all immediately after trading above it. So there's no need for it to come back down here. If it did come back down here, it's going to go lower, and we don't want to be in that position any longer.

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💎 Never trail your Stop Loss in a FVG after MSS.

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ICT was looking at FX to see if the Risk on scenario is still in place and it was. But that Stop loss can still be problematic.

💎 When Inversion FVG can fail? When we take out Buyside / MSS we can expect price to reverse. We look at that price leg if there is an inefficiency. If we have Inefficiency below Inversion Gap, then the Inversion can fail.

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Re-entering with 15 contracts with a proper stop loss this. 💎Price might wick pass the Inversion Gap. Always make allowance for that to happen. It can even go 1 tick below the wick C.E. but not more.

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