Technical Trading Setups Journal
- Thread starter cornix
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Wrote a rant on the matter of countertrend vs. trend reversal trades:
Many people consider trading reversals to be a form of countertrend trading. They look for every slightest reversal sign, jump on it and if trade is profitable, grab the quick scalping profit. No wonder they also have many losing trades and those few scalping profits may be not enough to cover losses.
Those countertrend traders often lose money in the long run.
Trend reversal traders, on the other side, look for clues that current trend is showing weakness and is apt to reverse completely. As a result, they only trade when serious reversal clues are seen on charts and tend to hold their winners for longer.
It is not hard to guess from my charts and posts which category of traders I consider myself to belong to.
I believe that for a newbie it is much better to wait for good confirmed reversal trade which offers good risk-reward than try to fade every swing in hope for a quick scalping profit. This difference in approach alone may result in a trader being consistent loser or consistent winner.
And by the way, this approach is much better also in relation to with the trend pullbacks. Quick and shallow retraces often trap traders and may result in almost as many losses as fading price swings against the trend.
I think psychological reasons for that is many traders are afraid to âmiss the tradeâ and tend to enter too early.
We shouldnât forget that our business is to make our profits to overcome our losses. If we do not so many trades, but they are higher probability and yield more profit each, we can often do better than catching a lot of trades, having a lower winning percentage and being exhausted in the end of the day because of too much emotional pressure of being in the market a lot.
Also, as said above, early countertrend trades result in a poor winning percentage and it is very painful for a newbie to have several losses in a row. Itâs even more painful to see next trade going in the money by some amount only to come back and result in a scratch or even a loser again.
Thatâs why newbies who tend to enter early also tend to exit early, because they get too scared of having one more losing trade or giving back paper profit it shows.
Not so when you see good clues for a trend (or a pullback in a form of a mini-trend, which is even better) being weak and about to reverse. You enter with higher probability of making a profit, even if you lose on one try, the second one usually looks even better and multi-trade losing streaks are rare with this approach.
Also, when you enter on those confirmed reversals, you see that they often lead to big reversals and it boosts your confidence, which is extremely important, because you know how it works and will not be afraid to hold it for longer. Which results in winnings to overcome losses over time and ta-da-da-da, we got a newly born profitable trader!
http://www.cornixforex.com/2012/02/countertrend-vs-trend-reversal-mindset/
Many people consider trading reversals to be a form of countertrend trading. They look for every slightest reversal sign, jump on it and if trade is profitable, grab the quick scalping profit. No wonder they also have many losing trades and those few scalping profits may be not enough to cover losses.
Those countertrend traders often lose money in the long run.
Trend reversal traders, on the other side, look for clues that current trend is showing weakness and is apt to reverse completely. As a result, they only trade when serious reversal clues are seen on charts and tend to hold their winners for longer.
It is not hard to guess from my charts and posts which category of traders I consider myself to belong to.
I believe that for a newbie it is much better to wait for good confirmed reversal trade which offers good risk-reward than try to fade every swing in hope for a quick scalping profit. This difference in approach alone may result in a trader being consistent loser or consistent winner.
And by the way, this approach is much better also in relation to with the trend pullbacks. Quick and shallow retraces often trap traders and may result in almost as many losses as fading price swings against the trend.
I think psychological reasons for that is many traders are afraid to âmiss the tradeâ and tend to enter too early.
We shouldnât forget that our business is to make our profits to overcome our losses. If we do not so many trades, but they are higher probability and yield more profit each, we can often do better than catching a lot of trades, having a lower winning percentage and being exhausted in the end of the day because of too much emotional pressure of being in the market a lot.
Also, as said above, early countertrend trades result in a poor winning percentage and it is very painful for a newbie to have several losses in a row. Itâs even more painful to see next trade going in the money by some amount only to come back and result in a scratch or even a loser again.
Thatâs why newbies who tend to enter early also tend to exit early, because they get too scared of having one more losing trade or giving back paper profit it shows.
Not so when you see good clues for a trend (or a pullback in a form of a mini-trend, which is even better) being weak and about to reverse. You enter with higher probability of making a profit, even if you lose on one try, the second one usually looks even better and multi-trade losing streaks are rare with this approach.
Also, when you enter on those confirmed reversals, you see that they often lead to big reversals and it boosts your confidence, which is extremely important, because you know how it works and will not be afraid to hold it for longer. Which results in winnings to overcome losses over time and ta-da-da-da, we got a newly born profitable trader!
http://www.cornixforex.com/2012/02/countertrend-vs-trend-reversal-mindset/
Quote from cornixforex:
Wrote a rant on the matter of countertrend vs. trend reversal trades:
Many people consider trading reversals to be a form of countertrend trading. They look for every slightest reversal sign, jump on it and if trade is profitable, grab the quick scalping profit. No wonder they also have many losing trades and those few scalping profits may be not enough to cover losses.
Those countertrend traders often lose money in the long run.
Trend reversal traders, on the other side, look for clues that current trend is showing weakness and is apt to reverse completely. As a result, they only trade when serious reversal clues are seen on charts and tend to hold their winners for longer.
It is not hard to guess from my charts and posts which category of traders I consider myself to belong to.
I believe that for a newbie it is much better to wait for good confirmed reversal trade which offers good risk-reward than try to fade every swing in hope for a quick scalping profit. This difference in approach alone may result in a trader being consistent loser or consistent winner.
And by the way, this approach is much better also in relation to with the trend pullbacks. Quick and shallow retraces often trap traders and may result in almost as many losses as fading price swings against the trend.
I think psychological reasons for that is many traders are afraid to âmiss the tradeâ and tend to enter too early.
We shouldnât forget that our business is to make our profits to overcome our losses. If we do not so many trades, but they are higher probability and yield more profit each, we can often do better than catching a lot of trades, having a lower winning percentage and being exhausted in the end of the day because of too much emotional pressure of being in the market a lot.
Also, as said above, early countertrend trades result in a poor winning percentage and it is very painful for a newbie to have several losses in a row. Itâs even more painful to see next trade going in the money by some amount only to come back and result in a scratch or even a loser again.
Thatâs why newbies who tend to enter early also tend to exit early, because they get too scared of having one more losing trade or giving back paper profit it shows.
Not so when you see good clues for a trend (or a pullback in a form of a mini-trend, which is even better) being weak and about to reverse. You enter with higher probability of making a profit, even if you lose on one try, the second one usually looks even better and multi-trade losing streaks are rare with this approach.
Also, when you enter on those confirmed reversals, you see that they often lead to big reversals and it boosts your confidence, which is extremely important, because you know how it works and will not be afraid to hold it for longer. Which results in winnings to overcome losses over time and ta-da-da-da, we got a newly born profitable trader!
http://www.cornixforex.com/2012/02/countertrend-vs-trend-reversal-mindset/
Excellent advice.
Unfortunately most traders struggle to know when they are with the trend or counter trend and when trend is changing. Changing a trading style from micro trading against the trend to holding for the run is a big scary jump. Perhaps a good approach to begin with is when you think you have understood the changes, place your stop and take a shower heehee.
That reminds me of someone...
Beginning with the formation of the daily wedge top where the bus was parked as top resistance gave a strong expectation of a wedge completion and break down.
That was followed by the expectation of the drop and pullback movement offering a minor and major vibration to rack up the pips.
When we reached the low it was a no brainer reversal which allowed me to call for a 200 pip long which was close on what we got.
Dead simple TA.
That was followed by the expectation of the drop and pullback movement offering a minor and major vibration to rack up the pips.
When we reached the low it was a no brainer reversal which allowed me to call for a 200 pip long which was close on what we got.
Dead simple TA.
first we need admit: even we do our best, but we still do counter-trend trading. it is inavoidable.
I am a trend follower. if it trends up, I buy logically. but it may reverse, I bought a top. put it another way, I counter-trend trade the market! someone called themseves faders, but in this case they are trend followers, while i am a counter-trend trader!
no matter what if you counter-trend trade, you lose! the only way to make money is stand on the right side of the market.
the truth is no one can achieve it: at any time they are always on the right side of the market, no one!
as for you enter too early or too late, all are just after-fact things. it is useless. the fact is you lot of time will enter too early or too late, sometime you enter properly. so there is no so called good setup or bad setup.
most setups are within 10% even lower. since if A happens, then B happens, there is no "must happen" realtionship, these two events only have a statistically probability realitionship. if a double bottom, then the market reverses and trends up, it is "maybe" event, some books claim 70% chance the reversal happens, in reality, based on my observation, far below 70%, like 20%~30%.
my suggestions to this thread is:
tell us the probability of the setup, and how you get the statistical number!
the reason I use setup to trade is I want to trade with predertimineed (hard stop loss), in a setup you can easily define loss. or in another word, trade consistently. in reality, it is more mechianical. but it is stupid.
when I think in that way, I found myself overtrade. also I found I actually trade like a gambler. if I found this setup, I trade, stopped out, even congratulate myself: well disciplined! that is stupid!why? I lost money!
why, I treat trading like throwing a coin into air, then guess which side will be when it hits ground! who can make a living by gambling!
I am a trend follower. if it trends up, I buy logically. but it may reverse, I bought a top. put it another way, I counter-trend trade the market! someone called themseves faders, but in this case they are trend followers, while i am a counter-trend trader!
no matter what if you counter-trend trade, you lose! the only way to make money is stand on the right side of the market.
the truth is no one can achieve it: at any time they are always on the right side of the market, no one!
as for you enter too early or too late, all are just after-fact things. it is useless. the fact is you lot of time will enter too early or too late, sometime you enter properly. so there is no so called good setup or bad setup.
most setups are within 10% even lower. since if A happens, then B happens, there is no "must happen" realtionship, these two events only have a statistically probability realitionship. if a double bottom, then the market reverses and trends up, it is "maybe" event, some books claim 70% chance the reversal happens, in reality, based on my observation, far below 70%, like 20%~30%.
my suggestions to this thread is:
tell us the probability of the setup, and how you get the statistical number!
the reason I use setup to trade is I want to trade with predertimineed (hard stop loss), in a setup you can easily define loss. or in another word, trade consistently. in reality, it is more mechianical. but it is stupid.
when I think in that way, I found myself overtrade. also I found I actually trade like a gambler. if I found this setup, I trade, stopped out, even congratulate myself: well disciplined! that is stupid!why? I lost money!
why, I treat trading like throwing a coin into air, then guess which side will be when it hits ground! who can make a living by gambling!
aussie buck roo trade.
long at the h and s in the asian dark zone
exit door at the 3.14 in the euro session.
next...
fib the fully diverged right shoulder top in the euro session.
exit at the db retest of the asian dark zone low.
yellow box
next...
short ny at the .86 fib retrace.
exit at the shop 4.2 full pull, bottom tick in ny session.
buy the db long at the low of the session.
.....................................
score card for the breakout guyz.
new short session low breakout pendings zip x 2
new session low shorts stops blown x 2
fib. math guys in full control.
cheers,
s
long at the h and s in the asian dark zone
exit door at the 3.14 in the euro session.
next...
fib the fully diverged right shoulder top in the euro session.
exit at the db retest of the asian dark zone low.
yellow box
next...
short ny at the .86 fib retrace.
exit at the shop 4.2 full pull, bottom tick in ny session.
buy the db long at the low of the session.
.....................................
score card for the breakout guyz.
new short session low breakout pendings zip x 2
new session low shorts stops blown x 2
fib. math guys in full control.
cheers,
s
swiss cheese trade.
dt reset in the dark zone / post asia session.
euro session short trade.
dt fully diverged short to the shop 5.7 full pull exit low of the day.
..............................
score card.
new long pendings filled at the top of the session and stops blown out in the first down leg of the euro session.
short guyz 1
longs zip
fib. math guys in full control.
cheers,
s
dt reset in the dark zone / post asia session.
euro session short trade.
dt fully diverged short to the shop 5.7 full pull exit low of the day.
..............................
score card.
new long pendings filled at the top of the session and stops blown out in the first down leg of the euro session.
short guyz 1
longs zip
fib. math guys in full control.
cheers,
s
Cornix,
I'm sure you have noticed that during strong trends most reversals, even confirmed ones, fail.
Makes you wonder.
I'm sure you have noticed that during strong trends most reversals, even confirmed ones, fail.
Makes you wonder.