Is It a Reversal or a Pullback?

[victorycountry]

Given that you guys are talking in circles about nothing new, way to pay your self on the back.

imo, when you trade, it's better not to differentiate a pb from a reversal. Whenever you detect a spike (using multiple time frames), you just exploit them. I think, for the traders who are participating in this thread, detecting a spike isn't(?) a difficult problem. But what puts traders in trouble is that whenever there is an opportunity to take some nice profit, they often hesitate to take the profit and want more, hoping(or thinking) that the current opposite price movement is a pullback.

For the same reason, imo trading on dip does not seem to be a good decision. How do you know for sure that is a dip?

 

[Aj2014]

View attachment 161031

Schizo.
Would this trade (loser) I made a few mins ago qualify as the same setup?

 

[wrbtrader]

Given that you guys are talking in circles about nothing new, way to pay your self on the back.

Most people usually answer questions when they don't understand something or they understand it but the past answers to the same topic just doesn't help them get from point A to point B.

Yet, others just get it on their own or because they asked that same question a long time ago and someone answered it in a way that they could understand. Also, there's a lot of newbies at this forum. That observation alone should tell someone that's what "not new" or "old" to you is indeed new info to the newbie. Heck, I came across a thread about "easylanguage coding" in TradeStation. Nothing new to me and I think I'm schooled well on the topic. Yet, its new info to the newbies and most of the likes on someone's message post that answered the question tended to come from posters with less than 50 message posts. Its simple observation...its new info...helpful info for the newbies interested in easylanguage codes but not useful to me.

Note: I didn't show up in that thread and post a message post announcing "nothing useful here".

Anyways, Baron has setup the forum with the "likes" system so that people can show that the replies are useful or that the reply they agree with. Thus, if the message post is not useful to you and you see the message getting "Likes"...its useful to someone else.

Seriously, if you're a troll...you won't participate but only continue complaining that the thread is not useful. That's your choice but be careful with that behavior because one day you're going to need an answer to a very important question and people with answers are going to recognize your user name and not respond to your question or just give you a one liner sarcastic message post with the intentions of not being useful.

 

[wrbtrader]

Schizo.
Would this trade (loser) I made a few mins ago qualify as the same setup?

Why would you take a trade (Short) at that area via something you don't completely understand ? Surely, you must have shorted there for other reasons (your own backtested trade signal) that just happen to correlate at the same time with that simple trendline break ?

Thus, tell us why you Shorted because I clearly remember schizo chart and I can almost guarantee he's not exclusively using simple trend line breaks all by itself with no other information...I only say that because of info he discussed in his other thread.

Simply, I seriously hope you Shorted at that price via your own backtested trade strategy and not because you saw someone post a chart and put the "sell" word on that chart in that particular price area.

Ask Questions ---> Backtest ---> Trade (good approach)

Trade ---> Ask Questions (bad approach)

 

[GarrettKimmel]

There's already an old thread http://www.elitetrader.com/et/index.php?threads/pull-back-vs-reversal.222970/

 

[romik]

Unless the FED changes it's stance on interest rates equity markets will continue selling off. You may want to play the potential bounces and hope for a reversal though.

 

[Aj2014]

This pull back in the ES futures has threw me off! Kept thinking it was a pullback in a strong downtrend, but after 3 losses, i'm now guessing that it's a 'reversal' and we're going up? (currently 1869)

 

[wrbtrader]

There's already an old thread http://www.elitetrader.com/et/index.php?threads/pull-back-vs-reversal.222970/

I eluded earlier about prior topics on this and the problems with the threads...no chart examples in those threads. In fact, I found 8 prior threads in which only one of them had a chart example. The problem is that many that were explaining what a pullback is and what is a reversal and what is a retracement and so do...they had already posted lots of chart examples in other threads not labeled as about those topics (e.g. posting charts in a journal but the journal wasn't about pullbacks/reversals even though that's exactly what the trader was doing). Yet, the charts were clearly trading in pullbacks or reversal price actions.

For example, in some of those prior thread topics...NoDoji participated but gave nice clean answers about the identification but no chart examples. In contrasted, she had posted tons of charts in other threads but they were not labeled as a discussion about pullbacks/reversals even though the chart examples were clearly about such which is why her charts or other discussions doesn't show up in ET's search about that topic.

Thus, if I label a chart example as toughtrade.png versus labeling the chart as pullback.png - I bet you can guess which chart will show up in the search and which chart example will not show up in the search if both are about pullback price actions. This is something Baron (ET owner) should do in that he should give instructions to members about useful ways to label their chart examples.

Yet, if you go to Google image and do a search...you'll find hundreds of chart examples of pullbacks, reversals, retracements, trends, failed trends and like they say...an image speaks a thousand words. Thus, you don't need to go to the website that stores the image...you can just view the chart on Google especially if someone if more interested in how to trade them and less interested in how to identify them because they already understand the identification.

 

[wrbtrader]

This pull back in the ES futures has threw me off! Kept thinking it was a pullback in a strong downtrend, but after 3 losses, i'm now guessing that it's a 'reversal' and we're going up? (currently 1869)

It is a pullback or counter-thrust back up in a strong downtrend. Thus, you've identified that correctly. The other issue, it doesn't imply that whatever strategy (trade signal) you're using will be able to exploit it.

Simply, its very common to have the identification correct but you still get losses because the markets doesn't care about our identification...it only cares about our trading. That's why you need to backtest until you're satisfied that you have a good entry signal.

If you then see the price action identified as a reversal...yeah, it may go up and then suddenly rolled over southward to re-continue the downtrend or it may go up and change into an Uptrend.

There's a difference between reversal and trend. Reversal implies the price has changed but it does not imply its a permanent change. In contrast, a trend implies it continuation into a particular direction and it doesn't imply that it will continue as such.

The real question is what is the context (not the trade signal) and does your trade signal (whatever that is) and your profit goals and stop/loss management work within the context.

Personally, I trade both but use position size management. For example, during trends...I play the position size game even in pullbacks of the trend. Thus, if its a downtrend...I'm normal to heavy on the Shorts but light on the Longs...the Longs aren't really looking for reversals. In contrast, the Longs are just trying to exploit a few points of counter-thrust back upwards before the price action rolls over southward again and these types of Longs tend to have smaller profit targets. As to reversals, I don't like to trade them with the thought its reversing and will turn into an Uptrend but I do sometimes via a smaller position size to manage the increased risk of trading reversals and with the goal of a bigger profit target than a typical Long I mentioned earlier.

Yeah, context is everything for me...FED, Oil, China...stuff like that I can't ignore. Thus, I've very bearish until one of those three particular issues goes away...away as in they're no longer headline news and they're no longer bearish themselves.

 

[i am nobody]

The other issue, it doesn't imply that whatever strategy (trade signal) you're using will be able to exploit it.

???

Some people don't work with reversals and pullbacks, but TRY (I don't say they take them) to pick the (real) bottoms and the (real) tops. They would be already long a few hours..... if they can pick the bottom. And their advantage is that if the trend reverses, they have plenty of room to decide what to do as they have a considerable profit at that moment. I try to stay out of reversals and pullbacks, and position myself before these things happen. Gives me a big advantage and buys me time.