I Hate Reversals

fordewind said:
So, as the image suggest, i went short 10 DAX CFDs.An hour or so later i reversed and another hour later made it even.I hate reversal as it can always go the opposite direction and whipsaw you.Normally, i just exit.But in that case, i was looking nothing at but my guts.

What do you guys normally look at to make that reversal decision?

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To answer your question directly as to what I look at when making a reversal decision. While your reversal on your chart would not be a reversal for me as I mentioned in a previous post it would be a point at which I would go long if i had not already taken a long position. That was explained in my earlier post of your chart.

But, do I see a reversal on your chart and if so how would I trade it?

When I am looking at a potential reversal and whether to trade it or not I like to see a strong break of a previous trend (bull or bear) then some attempt at a test of the trends extreme that was made before the break. Then I will look for an entry on resumption of the reversal attempt.

The reason: many reversals fail and end up just be some sideways action as a range. Period. However, that can still be profitable for a scalp. But to get more profit you have to wait for a BO of the sideways action. And the more bars in the sideways action when the BO of that action occurs it could go in either direction so i would be gauging the pressures within the sideways action to determine probable BO direction of that sideways action. If I already had a position on I might choose to just take profits if the sideways move is prolonging or shows weakness for my position.

At times reversals fail completely and the original trend resumes (i.e. they end up being just a PB followed by a resumption of the original previous trend). That is why I like to see a reversal attempt followed by a test (an attempt to make the reversal attempt fail) then a resumption of the reversal at which point I look for an entry. Keep in mind 80% of reversal attempts do fail.

As said, sometimes reversals will go into some sort of sideways action (range or triangle..etc) followed by a BO of that sideways action and a resumption of the reversal direction. That is what happened on your chart. There was a reversal attempt. A test. A resumption of the reversal that ended up going into a sideway PA (triangle) followed by a BO of that triangle and the reversal continues trending.

Here is your chart again explaining where I see a reversal and how I would trade it. Forgive my detail in my explanation but I am putting the detail in there for any trader new to trading that has no idea what I am talking about. My explanation may fail in terms of a new trader ubderstanding it but if he/she will meditate upon it cognitive clarity should come. Maybe! ROFL.

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Nighthawk said:
Ha, ha, ha! LMAO!

Pay me a quarter of a billion EUR and I will tell you the "secret sauce" of reversals in the German Dax market.
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Are you sure you are a nighthawk and not a buzzard? Your pricing is too high! ROFLMAO. A reversal is a reversal it doesn’t matter which market or time frame. Most reversal attempts fail.
 
fordewind said:
So, as the image suggest, i went short 10 DAX CFDs.An hour or so later i reversed and another hour later made it even.I hate reversal as it can always go the opposite direction and whipsaw you.Normally, i just exit.But in that case, i was looking nothing at but my guts.

What do you guys normally look at to make that reversal decision?

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Regardless, to the fact that you were Short and then did a position reversal (from short to long) via one click of the button or you were Short and then exited at a lost and then went Long and exited at a profit...

Position reversal are tough to do...Short 10 but then Long 20 to have a resulting position of Long 10. Yet, I not sure if that's what you're talking about in reference to position reversal. If so, I rarely trade that way but I did use to do them frequently in the past. Nowadays, I wait until I'm stopped out for a loss or exited for a loss without my stop being hit and then I just wait for next trade signal to appear regardless if the next trade signal is in the opposite direction or same direction.

As for your specifc trade...the Long position was breaking outside (Up) the recent contracting volatility intervals. I know you referred to your Long entry as intuition / experience trade (your guts) in situations like that...it would have been a valid trade signal for me.

The hard part...the psychological variable (traders not automated have psychological variables impacting their trades) would have required you to be discipline enough to see that Long opportunity after a losing Short position regardless if it was a position reversal or you exited the losing Short position and soon after entered a Long position especially in light of the fact you probably had some fear that the infamous whipsaw would show up.

Good intuition and recovery for you in the DAX cfd but I would have just waited for a valid Long signal to show up after covering the losing Short position considering there was plenty of trading left in the trading day in the DAX.

1) Also, not sure what you saw to merit that initial Short position...was it "gut feel" too ???

2) I'm curious, do you use other Eurex futures or Euronext futures to help you make trade decisions in DAX futures (I know we're really talking about CFDs) ???

3) Just as curious, did you exited that Long position via gut feel too...when you reached a profit that made you breakeven from the prior loss or did you exit the Long position at a planned profit target...same exit you would have taken had the prior losing trade had not occurred ???

That's the art part of trading. Some may see why you initially went Short while others saw a Long opportunity, others using automation, others using "gut feel" without a tested trading plan, others trading discretionary with a tested trading plan and others see no trade opportunities involving your Short & Long entries.

It is a piece of art with all the different perspectives for the exact same price action on that chart.

wrbtrader
 
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wrbtrader said:
Regardless, to the fact that you were Short and then did a position reversal (from short to long) via one click of the button or you were Short and then exited at a lost and then went Long and exited at a profit...

Position reversal are tough to do...Short 10 but then Long 20 to have a resulting position of Long 10. Yet, I not sure if that's what you're talking about in reference to position reversal. If so, I rarely trade that way but I did use to do them frequently in the past. Nowadays, I wait until I'm stopped out for a loss or exited for a loss without my stop being hit and then I just wait for next trade signal to appear regardless if the next trade signal is in the opposite direction or same direction.

As for your specifc trade...the Long position was breaking outside (Up) the recent contracting volatility intervals. I know you referred to your Long entry as intuition / experience trade (your guts) in situations like that...it would have been a valid trade signal for me.

The hard part...the psychological variable would have required you to be discipline enough to see that Long opportunity after a losing Short position regardless if it was a position reversal or you exited the losing Short position and soon after entered a Long position especially in light of the fact you probably had some fear that the infamous whipsaw would show up.

Good intuition and recovery for you in the DAX but I would have just waited for a valid Long signal to show up considering there was plenty of trading left in the trading day in the DAX.

1) Also, not sure what you saw to merit that initial Short position...was it "gut feel" too ???

2) I'm curious, do you use other Eurex futures or Euronex futures to help you make trade decisions in DAX futures (I know we're really talking about CFDs) ???

3) Just as curious, did you exited that Long position via gut feel too...when you reached a profit that made you breakeven from the prior loss or did you exit the Long position at a planned profit target...same exit you would have taken had the prior losing trade had not occurred ???

wrbtrader
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Of course the fear was there.I was losing 1k(i might have lost another 1K on the reversal and feel myself a miserable bum[that`s why i hate doing it]), but i didn`t double up but entered the same 10 long at a -1K.

1.The short was according to the algo that running on the other platform(i allow to generate signals to my strategy, but enter/exit manually);
2.No, i don`t use anything else, but DAX itself;
3.No, i exited at a BE.

As the price first started to take away i put a scratch order, it didn`t closed but started to meandering along the order for awhile at a - 80/100 bucks.I should`ve closed and take that little hit, i guess.
 
You were talking about 1 Jun DAX trade.
I just checked my trade journal.
I was trading during that timeframe too.


In general, I don't like getting signal from DAX alone because I felt DAX tends to be laggard.
I normally intercorrelate DAX with NQ, and to some extent ES.
DAX has been trading sideway since 29 May.


On 1 Jun asian session, NQ started its uptrend for whatever reason ( US vs world trade matter?).
Then on 1 Jun European session, NQ continued its uptrend.

So I longed both NQ ( with multi lots) and DAX (with reduced quantity);
NQ being lead, and DAX laggard.

NQ has been known to be rather tradable outside US session.
 
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maxinger said:
You were talking about 1 Jun DAX trade.
I just checked my trade journal.
I was trading during that timeframe too.


In general, I don't like getting signal from DAX alone because I felt DAX tends to be laggard.
I normally intercorrelate DAX with NQ, and to some extent ES.
DAX has been trading sideway since 29 May.


On 1 Jun asian session, NQ started its uptrend for whatever reason ( US vs world trade matter?).
Then on 1 Jun European session, NQ continued its uptrend.

So I longed both NQ ( with multi lots) and DAX (with reduced quantity);
NQ being lead, and DAX laggard.

NQ has been known to be rather tradable outside US session.
More...

Was thhe Non Farm day.Probably who moved the market had some insider info.
 
fordewind said:
Was thhe Non Farm day.Probably who moved the market had some insider info.
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it might be.

I remembered on that day, before Nonfarm data was released, gold price already started to drop quite significantly.
 
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