Is It a Reversal or a Pullback?

Here's the same chart upside down. Think you have the foresight to nail the top?

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Short term trend forecasting isn't necessarily the only way forward, one could research candle to candle at high volume times.
 
romik said:
Short term trend forecasting isn't necessarily the only way forward, one could research candle to candle at high volume times.
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I agree. But the bigger the timeframe the wider the range you need to take to have the same accuracy. Standard deviation will give much higher values resulting in a much wider channel, and returns will be much lower with higher drawdowns as the system will trade less trades with wider stops.
 
The problem is that when one is looking at a price chart, in many ways it's making decisions based on 50% of the story. You see it moving, according to your parameters the trend has finished and hence the new one has started. But those are your parameters, who is to say that order flow will be in agreement with your parameters. Look at recent Autodidact's call, his parameters put probability at 90%, a high rate by anyone's standards, but it was a losing call/trade. BTW I am not trying to rub it in, not at all. I am just saying that future will always remain an unknown factor and no matter what the historical statistics were they can very easily alter in the next few seconds/hours/days/weeks/months.
 
romik said:
The problem is that when one is looking at a price chart, in many ways it's making decisions based on 50% of the story. You see it moving, according to your parameters the trend has finished and hence the new one has started. But those are your parameters, who is to say that order flow will be in agreement with your parameters. Look at recent Autodidact's call, his parameters put probability at 90%, a high rate by anyone's standards, but it was a losing call/trade. BTW I am not trying to rub it in, not at all. I am just saying that future will always remain an unknown factor and no matter what the historical statistics were they can very easily alter in the next few seconds/hours/days/weeks/months.
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This is very true, I was surprised to get it wrong, especially so quickly, does not happen to me often, but it did, and it will happen again and again and again, the life of a trader. Best we can do is make it a manageable loss when wrong so we can live to trade another day, no matter the type of trading; position, swing or daytrade.

It's very important to accept defeat CALMLY so you can move forward with a clear mind.
 
schizo said:
My intention wasn't to bust anyone's balls and I apologize if I came across as aloof. However, my intended target audience was intermediate to advanced traders. From where Autodidact left off, here are some more random thoughts.

1) Autodidact brought up a good point. Just where does a reversal occur? Traders become insanely sensitive at these levels. Why?
2) What about pullbacks? Before a meaningful reversal takes place, you almost always see price retest the high again. Why?
3) There seems to be more pullbacks in a major trend than in a minor trend. Why?

On a closing note, here's food for thought.

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word of thought
looking at this chart that everyone is comparing. i have noticed at 1400(2pm) that their is increased movement in the chart.is this an opening time for the market or prior a news event.the reason i ask is that i have noticed when i trade the australian futures markets their is a lot of times at 9.50am when the markets opens on low volume it gets pushed like this chart and then once the market officially opens at 10am it shoots up in the other direction.also prior a major news event.it is a way to trap traders.
 
But that's analysing the past, let's get a thread going analysing trends as they develop, ET collective :)

Have a traffic light system, green for uptrend, red for downtrend, amber sideways=no trend. All on intraday basis RTH.

Only highest participation ratios will trigger an entry, have to debate stop placement (perhaps yesterday's Hi/Lo) and target will be end of trend based again on highest participation ratio.

I think it's a bloody good idea ;)

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To make an assessment of whether a move is a pullback or reversal you should look to the higher time frames w.r.t. the time frame you are seeing the pullback/reversal on.

Personally I find trying to pick highs and lows sub optimal. I wait for more confirmation and for early entrants to be stopped. You can also watch correlated markets to aid your decision.
 
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