Day 2 after OPEX

Trading notes for 2026-02-24

TL;DR

Planned to short BTC and ES on a day 2 continuation setup after they took out daily highs, expecting further downside from a descending triangle pattern. The market quickly invalidated the setup by taking out lows and reversing higher without looking back. Stuck to my plan and avoided revenge trading.

Market Context

The market was trading within a descending triangle pattern on the higher timeframe, taking out previous lows. Both BTC and ES had taken out their daily highs the previous session, setting up what appeared to be a classic day 2 continuation scenario to the downside.

However, market conditions shifted rapidly at the open. Instead of following through with the expected bearish continuation, both assets immediately took out the lows and then reversed sharply higher without any meaningful pullbacks.

Thesis & Plan

My trading thesis was based on the descending triangle formation visible on the higher timeframe charts. The setup looked textbook - we had been making lower highs and taking out previous lows, which typically suggests continued bearish momentum.

The specific plan was to:

• Wait for BTC and ES to show weakness after taking out their daily highs
• Enter short positions on both instruments
• Target a day 2 continuation move lower, capitalizing on the expected follow-through selling

This seemed like a high-probability setup given the technical picture and the fact that both assets had already pushed through key resistance levels the day before.

Entries & Exits

I didn't execute any trades on this setup. The market opened and immediately invalidated my thesis by taking out the lows and reversing higher without providing the entry opportunity I was waiting for.

Rather than chase the move or flip to the long side reactively, I chose to step aside and wait for my planned entry conditions, which never materialized.

Risk Management

The most important risk management decision I made was not trading at all. When the market moved against my thesis right from the open, I resisted the urge to:

• Jump into shorts at the lows (which would have been revenge trading)
• Flip to longs and chase the breakout higher
• Force a trade that didn't fit my predetermined criteria

This disciplined approach prevented what could have been significant losses if I had tried to impose my will on the market.

What Worked / What Didn't

What Worked:

• Sticking to my predefined plan and entry criteria
• Not revenge trading when the setup failed
• Maintaining discipline when the market moved against my bias
• Recognizing that sometimes the best trade is no trade

What Didn't Work:

• The initial thesis and setup identification
• The assumption that the descending triangle would play out as expected
• Not considering the possibility of an immediate reversal scenario

The technical setup looked solid on paper, but the market had other plans. Sometimes even the most convincing patterns fail, and that's just part of trading.

Lessons Learned

This trade reinforced several critical lessons about trading discipline and market humility:

Pattern failures are part of the game. Even textbook setups like descending triangles don't work 100% of the time. The market doesn't owe us anything just because we identify what appears to be a high-probability pattern.

Discipline trumps being right. My ability to stick with my plan, even when it meant not trading, was more valuable than trying to salvage something from a failed setup. The temptation to jump into shorts at the lows or chase the breakout higher was strong, but following my rules protected my capital.

Sometimes it's just not your trade. I'm still questioning whether I could have seen this reversal coming or if this simply wasn't meant to be my trade. Not every market move is tradeable from our individual perspective, and that's okay.

Market structure can change quickly. The descending triangle pattern that looked so compelling on the higher timeframe was quickly invalidated by the price action at the open. This reminds me to stay flexible and not get too married to any single view.

Looking ahead, the market appears to be coiling for a significant move. While my bias remains toward the downside based on the overall structure, today's price action serves as a reminder that markets can surprise us. I'll continue to wait for clear, high-probability setups rather than forcing trades that don't meet my criteria.

The key takeaway is that good trading isn't just about identifying winning setups - it's about knowing when not to trade and having the discipline to wait for the right opportunities.