Here's a long trade I took a few days ago thinking it was only a pullback but it went on to be a 'reversal'
I had no way of knowing what it would do. All I knew is that we seemed to be trending up, we'd pulled back a little, looked to be resuming the trend and put in a higher low, and I went long....then got stopped.
Here's the hindsight answer to your hindsight question about "I had no way of knowing".
Yes, there is a way of knowing and it involves being prepared if the price had continued higher and it involves being prepared if the price had rolled over southward (reversal). That's the issue with most traders...they are not prepared for both possible outcomes. Instead, they get married to one possibility and when the other outcome occurs instead...they get stopped out for a loss, breakeven or small profit and they sit there watching the price continue downwards with them on the sidelines just watching.
I sometimes called that type of trading as a trader trying to outsmart the market instead of trying to make a profit...a trader that's fixated on one outcome instead of being fixated on two possible outcomes. An institutional trader once called such "dynamic trading" when you're prepared to take action on both possible outcomes.
That pullback analysis you made at the moment of your trade was correct. Yet, you were not prepared if the price action "changed" after your entry regardless if it was 5mins later, 1hour later, 1day later or 1month later.
Then when that price action rolled over southward...that's the other outcome (Short position) and you were not prepared to exploit that outcome because you were only focus on one outcome involving the price pullback continuing higher to make you money on that Long position.
Therefore, the real question for you is this. Did you or did you not get a Short signal when it rolled over southward. This is something you need to seriously think about because a small profit, breakeven or small loss on that Long position is normal but missing that down movement is not normal.
Once again, the goal is to be profitable and not to try to outsmart the market because the market is always smarter than us but we can still make money via being prepared for both possible outcomes.
This is why its strange when I hear people say I only trade pullbacks or I only trade reversals or I only trade trends or I only trade range. Those are traders trying to outsmart the markets instead of being prepared for both outcomes when their trade doesn't work as planned.
Simply, don't get fixated on one outcome (trying to outsmart the markets). Instead, be prepared to be wrong and then be prepared to for the other possible outcome so that you can exploit it.
If you're prepared for both possible outcomes and you don't get a trade signal when the other outcome shows up...that's ok and you just wait for the next trade opportunity to show up.
P.S. I do understand you were only talking about one trade position (Long position as a pullback trade) and that its possible you actually did recognize later that reversal price action resulting in you Shorting soon afterwards. If such happened for you...you were prepared for both possible outcomes (dynamic trader).
That's why dynamic traders can be very profitable with a 50% win/loss ratio instead of trying to be right. They have a strong understanding that the goal is to be profitable and you can do that via being prepared for both outcomes.
