Do you catch tops and bottoms?

D

DisciplinedHedg

As a trader, it can be very profitable to catch the tops and bottoms. I remember reading in Market Wizards, a trader said that he made all his money on the big tops and big bottoms despite being wrong many times. However, many traders have also been blown out of the water doing this.

Do you try to anticipate tops and bottoms before they appear, or do you wait for confirmation?

Being anticipatory can maximize profits, while waiting for confirmation can reduce risks.
 
Yes, I project areas of extremes and reversals and act accordingly based on setup patterns .. I don't just blindly enter positions based on my numbers.
 
]Quote from DisciplinedHedg:

As a trader, it can be very profitable to catch the tops and bottoms. I remember reading in Market Wizards, a trader said that he made all his money on the big tops and big bottoms despite being wrong many times. However, many traders have also been blown out of the water doing this.


Tight stops and ego left behind the door of a trading room are best tools to prevent being blown out of the water when one is trying to pick tops or bottoms.


Do you try to anticipate tops and bottoms before they appear, or do you wait for confirmation?

I do both, it is just more interesting and much less stressful.


Being anticipatory can maximize profits, while waiting for
confirmation can reduce risks. [/QUOTE]


No doubt about that!
walter
 
Quote from Breakout:

I like to anticipate...Here's a little Article that some guy posted. Not a bad read.
More...

The assumption in his example is that that was the bottom. So obviously the anticipatory trader is going to look much more appealing than the confirmation trader.

However, you can use the exact opposite example. Lets say it was just a bounce, and the downtrend continued. Then the anticipatory trader would get stopped out, and the confirmation trader would've looked like the "smart one."

The only true way to know which trader is successful would be over the long term. Are the big wins that the anticipatory trader makes enough to cover his frequent stop losses since he is fighting the trend? Or does the confirmation trader come out ahead over time because he is using safer entries even though he is making less?

That is still the question...
 
Quote from DisciplinedHedg:



The assumption in his example is that that was the bottom. So obviously the anticipatory trader is going to look much more appealing than the confirmation trader.

However, you can use the exact opposite example. Lets say it was just a bounce, and the downtrend continued. Then the anticipatory trader would get stopped out, and the confirmation trader would've looked like the "smart one."

The only true way to know which trader is successful would be over the long term. Are the big wins that the anticipatory trader makes enough to cover his frequent stop losses since he is fighting the trend? Or does the confirmation trader come out ahead over time because he is using safer entries even though he is making less?

That is still the question...
More...

That's like asking if entering on retracements or entering on a breakout is better. They both can work and at times - one will look good, while the other doesn't.
 
In daytrading, for quick scalps, most of my trades are made by picking very very short terms tops and bottoms. But, as far as swingtrading goes, I think it's safer to stay with the trend.
 
Quote from DisciplinedHedg:



The assumption in his example is that that was the bottom. So obviously the anticipatory trader is going to look much more appealing than the confirmation trader.

However, you can use the exact opposite example. Lets say it was just a bounce, and the downtrend continued. Then the anticipatory trader would get stopped out, and the confirmation trader would've looked like the "smart one."

The only true way to know which trader is successful would be over the long term. Are the big wins that the anticipatory trader makes enough to cover his frequent stop losses since he is fighting the trend? Or does the confirmation trader come out ahead over time because he is using safer entries even though he is making less?

That is still the question...
More...

Good points...
 
I must admit I am surprised by the results albeit this small nearly meaningless sample size.

I thought we would have an overwhelming majority being top/bottom callers.

Interesting...
 
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