Recognizing Reversals from the Top/Highs

[murray t turtle]

I always call entry, stop and exit in real time

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WELL I have had huge drawdowns, also+ that's one way the turtles made so much money.LOL
All that money was not made by calling short term reversals.LOL

In theory profit by short term reversals is possible;
Crabel Capital Management has done it. But one person also made a million bucks , one product-short term= Pet Rocks LOL. Most of the profit has been made in stock market/related, is by people investing or trading like Jim Rogers ''i dont even know what a reversal is''-Jim Rogers LOL, . Thanks, Buy 2 Sell1

 

[Overnight]

Nope----the failure swing advice is really spot on.

So where is the market going from here, based on that chart?

 

[trader99]

Thanks for all of you guys chiming in. Very interesting points.

My thought experiment(and real experiment) is merely for intraday trading. It's probably next to impossible to call long term tops.

A supertrendy day that goes on and on. Fine. No point calling tops there. I've quit calling tops on trendy days and it improved my P&L a lot by not taking stupid risk and losses. Fair enough.

But on a typical rangebound days, there are TONS of intraday reversals. It runs up a bit then reversed to a lower bound then tries run up again. Over and over. It would be nice to have a way to detect that in realtime.

Just now. GC has been going up nicely. Then out of the blue it reversed. Got out at a small loss. I know it's probably still a bull market. But I ain't gonna sit through a 25-30-50pts drawdown just to get out even like in the past. Or worse panic sell at the bottom. Keeping losses small and winners big is the core principle of trading. There's a new bus that comes every few minutes. No need to be stuck in a trade and sitting through harrowing losses in hope of getting out even.

Enough of that ranting.

My point is even on a supposedly uptrending markets there are plenty of reversals. Even NG. NQ, etc. All of them have intraday reversals. Some of the reverals are quite nasty.

I think the hard part(but I'm getting closer to a solution) is to distinguish between a pullback in an uptrend and a reversal in real-time!

Sometimes I would buy into weakness thinking it's just a pullback in an uptrend then lo behold it WHOOSH down hard!

Any ideas? I guess stops are good for those instance... hehe

P.S. ETers, I've been very busy with non-trading stuff that I have in my life. I can't post much lately.

P.S.S. Of course, now it's reversing back. Of course, taking that small losses was still the right trading decision.

 

[easymon1]

would buy into weakness thinking it's just a pullbac

mr trader99,
A quick y/n question please, do you have a written and tested trading plan?

 

[MKTrader]

%%
WELL I have had huge drawdowns, also+ that's one way the turtles made so much money.LOL
All that money was not made by calling short term reversals.LOL

In theory profit by short term reversals is possible;
Crabel Capital Management has done it. But one person also made a million bucks , one product-short term= Pet Rocks LOL. Most of the profit has been made in stock market/related, is by people investing or trading like Jim Rogers ''i dont even know what a reversal is''-Jim Rogers LOL, . Thanks, Buy 2 Sell1

Crabel was an innovator...not sure what he trades now, but I don't think his opening range stuff works any more. Like anything else that's well known and published, it stops working when too many people use it. He's done a very good job of minimizing drawdown and volatility over the years, but like most fund managers (and Warren Buffett for that matter), he's lagged the S&P 500 big time since 2009.
https://ctaperformance.com/crabel

 

[trader99]

Crabel was an innovator...not sure what he trades now, but I don't think his opening range stuff works any more. Like anything else that's well known and published, it stops working when too many people use it. He's done a very good job of minimizing drawdown and volatility over the years, but like most fund managers (and Warren Buffett for that matter), he's lagged the S&P 500 big time since 2009.
https://ctaperformance.com/crabel

Impressive stats actually:

2009: -0.33%
2008: -0.95%

Since then not so hot...

 

[MKTrader]

Impressive stats actually:

2009: -0.33%
2008: -0.95%

Since then not so hot...

The S&P was up 26.86% in 2009. It was almost a repeat of 2003 when the S&P recovered from the Dot Com crash with a 28.68% gain. In both years, stocks bottomed and rebounded in March. Crabel had a 1.84% return in 2003.

He did very well from 2000-2002, three double-digit gains as stocks fell all 3 years. But he seems to have lost the really big edge he had from 1998-2008. Still, it might be a good choice for diversification (he has a very low correlation with the market) IF you have a spare $1 million to invest...

I think his track record shows how algos have made it harder to find an edge, and the biggest advantage of a fund like Crabel's is low volatility/correlation with the market and annual returns in the 6% range. But don't expect 20% average returns like he made 15-20 years ago.

 

[murray t turtle]

Crabel was an innovator...not sure what he trades now, but I don't think his opening range stuff works any more. Like anything else that's well known and published, it stops working when too many people use it. He's done a very good job of minimizing drawdown and volatility over the years, but like most fund managers (and Warren Buffett for that matter), he's lagged the S&P 500 big time since 2009.
https://ctaperformance.com/crabel

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And that shows again ,just how an above average fund can still get slammed by SPY/S&P 500, since 2008, MK Trader. NOT much in 2009,oops, but still far better than SPY from 1998/10+ year chart ,on your link. Thanks+ assume he/fund is still short term trader- he got trained that way@ start......................................................................................................

 

[MKTrader]

%%
And that shows again ,just how an above average fund can still get slammed by SPY/S&P 500, since 2008, MK Trader. NOT much in 2009,oops, but still far better than SPY from 1998/10+ year chart ,on your link. Thanks+ assume he/fund is still short term trader- he got trained that way@ start......................................................................................................

While most financial advisers hate them, I think those insurance products (universal life, etc.) where you get the market's return capped around 15%...with no losing years (0% return in down years) probably beat almost all of the current hedge funds and CTAs. Same idea--almost the same return as the market with greatly reduced drawdowns. The devil is in the details, though...you have to really minimize expenses when you buy them.

 

[MKTrader]

I also think all these would-be day traders on ET should look long and hard at Crabel's diminishing performance. The guy is a living legend, with huge amounts of money for research and execution (he has billions in AUM), and he's not making 5-10% monthly like so many here aspire or claim to do.