Is It a Reversal or a Pullback?
- Thread starter schizo
- Start date
In that case, I'm all ears. Would you mind explaining why you believe it's flawed?
BTW it was never my intention to say that "it's my way or the highway". But would you not agree that if you were to detect the difference between a reversal and a pullback, be it (1) in advance or (2) as a reactionary measure when it does happen, you would be highly successful in this endeavor?
Here's the same chart with modification. Is 1 a reversal/pullback? How about 2? What about 3?
The problem is if you look closely at 2, you would notice a pullback followed by another pullback. So could a reversal be:
Reversal = Pullback + Pullback
IMO one can hope he is right, when he is wrong there's a protective stop, when he is right there ought to be a gain. Average gain has to be a multiple of an average stop or risk 1% gain 3%.
IMO it's impossible to know for sure whether you are participating in a trend change or a bounce (pullback), future is always an unknown variable and can not be quantified, only past performance.
Luck is important. A good example would be expecting a 3% deviation and instead you get 9%. Could you have known this prior? Yes, but that would have been a guesstimate.
It's impossible to tell with certainty I agree, what makes it all possible to obtain positive expectancy is to study the markets well enough to shift this from flipping a coin to enhanced odds, and of course as you said a good risk/reward will only improve the equity curve, how much you know, how long you have studied, will only improve these variables.
With those elements you can be certain to obtain positive returns over the long run (assuming prudent risk management) but you can never be certain of the outcome of any trade, and that in a nutshell is what trading is all about, and pretty much why your ego should not be affected when wrong, because it does not really matter, it's impossible to never be wrong; it will happen over and over regardless of how good or stellar your techniques or returns are.
Again, this is what trading is all about.
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Although research is of great importance I still believe that there is no way of knowing, by looking at a chart, whether something IS a pullback or a reversal, until future becomes present. You could have seen a pattern a thousand times, yet the next time is always equal odds. We can easily establish this via a test, any takers?
Experience/knowledge do matter a lot, but it's either luck or inside information that will improve odds IMO.
Experience/knowledge do matter a lot, but it's either luck or inside information that will improve odds IMO.
the chart looks like its first of all come from Higher (to the left of the chart we can't see) which means price is currently in a down trend.... I think also the down trend maybe close to completing..maybe a head and shoulders reversal..harder to call a rev without volume though
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