Picking Tops.

[Miragers]

Quote from brownsfan019:

Depends who you ask Dack. Recently, the trend followers are saying WOW, THIS IS FUN. The reversals are saying OUCH, THIS HURTS. It also depends if you are asking day-traders or swing traders. I personally just trade intraday, so I just want the markets to move - up or down, I don't care. There are day-traders making money shorting throughout this runup as it just depends on how you enter and how you exit. Example - if you are going for a 1 point profit on the ES, you could make this shorting throughout this entire runup since the markets typically do not shoot straight up all day.

Personally, I would say that picking a top is much riskier simply b/c it is much harder to do. As I said in another reply, it's not easy standing in front of the train. Eventually that train will slow down, but it can cost a few bucks trying to figure out when.

Amen! Ive been shorting stocks intraday for the last 8 trading days in a row and all 8 have been profitable. But im not looking for major reversals, just waiting for the momentary pause and exastion in a runup before it consolidates and moves up again. If you dont get greedy you can make ok money with low risk.

 

[Miragers]

Quote from 5Pillars:

Well if you are trying to build up a SHORT swing trade (from numerous position trades over a several day period), then the best possible cost basis for the overall swing in time will be constructed PRIOR to the confirmation of a short term top.

To nail a good swing, you need to be taking shots PRIOR to absolute confirmation of the top being put in place....imo. This is a preemptive trade methodology and not a post-reactionary.

Very good strategy especially if your commision is low. I usually open a small position after all of the momentum guys rush into a stock when it breaks a new high. Then start adding to the position at about .10 increments IF volume on the up periods tapers off and increases on the down ones and the OS indicators are confirming the exastion. This allows you to be in the position prior to all the momentum guys bailing out with their profits and looking for the next trade.

 

[romik]

Quote from 5Pillars:

Well if you are trying to build up a SHORT swing trade (from numerous position trades over a several day period), then the best possible cost basis for the overall swing in time will be constructed PRIOR to the confirmation of a short term top.

To nail a good swing, you need to be taking shots PRIOR to absolute confirmation of the top being put in place....imo. This is a preemptive trade methodology and not a post-reactionary.

I do agree with building a position, I do not understand how can one consistently pick exact tops/bottoms on the other hand. I doubt it's possible.

 

[Learner]

I am agree with 5Pillars. Bottom takes a longer time to form, top doesn't always the case. Top picking is harder than bottom.

Happy to see his contractive posts.

 

[romik]

Quote from 5Pillars:

For myself a close of the ES below the 1383.25 level one day will move me to the thought of a short term top confirmation. So far we pierced that level (1383.25) since the sell-off day and we are just trading in the range between our years highs and that level.

1383.25 is the price level I am watching to feel a chance for my SHORT swing trade to have a chance at a real good run. On the way down to 1383.25, I have a minor MP level at 1395.75 and a major level at 1389.75.

I favour a close below 1360.98 SPX personally and 11965.31 in DJIA

 

[5Pillars]

Quote from romik:

I do agree with building a position, I do not understand how can one consistently pick exact tops/bottoms on the other hand. I doubt it's possible.

You don't now for sure when building it. It is like building a boat, you do the best you can with what you have, and when you are all done and committed you go see if it will float....LOL.

You get to find out if it works AFTER the fact of building it.

 

[5Pillars]

One other very favorable factor of being near a top or bottom is increased volatility........so far I am getting almost twice as many trade signals the last several days than before (I like that).

 

[Learner]

YM 12345, is likely challenged b4 the week ended. IMHO

Always a learner

 

[Cutten]

Quote from Dackster:

How do traders know when a top is approaching?

Experience.

 

[Cutten]

Quote from Dackster:

so when it comes down to picking tops, there is no real concrete or catagoric evidence, no absolute way (except for when the trend has changed/hindsight). Why do people do it then?

Same reason people pick bottoms. Because, if you can do it, there is no better risk/reward in the market.