On Monday night we warned that the new patterns would be vulnerable to price action we respectfully term "The Dreaded Red Cross." Joe has fielded a few questions and we have decided to post an explanation.
Since Hooper's main attribute is creating a defined risk window to interact with the market- the P/L mean reversion risk comes from multiple passes through the window that stop short of R.O. (a symmetrical red Cross would be 1 number up to 1 number down) These moves can provide plenty of ADD day trading singles for addicts but a core position trade would need to increase a unit with every pass to mitigate stop wash (just getting your money back)
In the example here 10 year notes "turned down" below 07..only went to 02+..then reversed above 12 to 23+/24...Then -this morning- returned to 07. A hypothetical short at 06 (slippage adjusted) was stop/reversed at 14 and would have had to be sold at 23 (randomly because objective at 28) to wash. Unpretty but not uncommon. Red crossing markets will self correct to the RO and the next pattern will trade "cleaner" - that usually occurs shortly after participants become comfortable leaning against the Hooper defined direction and playing in the range.