Why do i keep buying at the wrong time?

[NoahA]

trying to figure out if there is some faulty programming that makes me see something that is not there.

The replies of Laissez Faire and PPC essentially cover all the point that I would also make.

I don't think you did anything wrong. Trend is clearly up, so it looks like it will continue. There is a double top, so a clear rejection area, but also higher lows, so maybe pressure is building for a breakout. Finding out its a penny stock now maybe throws this analysis out the window because I don't look at those, and as he points out, you aren't going to have the same patterns. If there isn't a big buyer over several days, who will continue to push price up?

But as LF points out, you need to a much bigger sample size of this pattern. You only think you did something wrong because it didn't work out. I'm sure if you shorted at this same spot and price broke out higher, you would be asking the same question about why it didn't work out.

We will never know what happens next, and you also will not find a pattern by itself that will give you 80% odds of working. And as LF points out again, the risk/reward isn't the best. You're getting in at the green arrow, and hoping the yellow area breaks as it goes higher. But you have to assume that if it drops instead below the purple line, and doesn't quickly come back up, the trade is in trouble.

But I understand that if you wait for a better entry, it might not come. Maybe it keeps going higher and you're left out. So you take a risk, as you did, and this time it didn't work out.

Since PPC pointed out that the stock already tripled, this risk is now even riskier. I based all my analysis on the idea that this is just a trading range after a very successful rally from the open.

There are some people in trading who swear by the idea that success comes down to trade management. Of course good entries help, and having an idea about the general direction is good, but since you will be wrong often, its more important to get in at the best possible place and take a small loss, rather than get in very late, have it turn into a winner, but have taken on great risk.

There will be many examples that you can find where your entry on this chart pattern worked well and price broke out higher. So would the lesson be any different? It didn't work here, but may work again in the future.

Here is a random snippet from the ES hourly chart. We see a similar setup with a rally, followed by a double top at the yellow line. Then we have a double bottom at the purple line. You even had a higher low instead of a double bottom, so that looked more bullish. But here the bottom broke, but quickly reversed up, and that double top had no trouble breaking on the third try.

So do you think you did something wrong? Or maybe your entry just wasn't the best. Perhaps the conditions weren't right for taking a long entry there given the tripling of price already. But I would say its not that you did something wrong, but just that it wasn't the most ideal entry. One day, you might be doing everything right, and still have 5 losses in a row. So just think about what it means to be doing something right because in trading, right and wrong is very, very subjective.

 

[Bad_Badness]

I left out more info on purpose,
I want to get feedback on what you see on that chart based on that. Without bias on what happened after.
Its easy to break break down chart when it already happened.
I want to compare your thinking to my thinking.
So i can see why i get stuck buying at exactly same spot

Is there a noib trap in this chart pattern where i would think that this will go up again?

What i saw is strong buying pressure with those last green bars it was number 3 on top 10 volume that day.
Alot of tape action.
And then suddenly buying volume disappeared and red orders started coming in.
i thought it was a pullback,
But it kept pulling back more and more

The ticker is NVOS

Hey Mute,

This is clearly the wrong place to buy:
1) It made its run, so the question is will there be a continuation, AND will it be about the same amount as the first run.
2) The second attempt failed.
3) See that red doji? That was the 3rd attempt that failed.
4) See the shooting star right before you bought? That could be either a failed attempt or it could be a prelude to the run.

Here is what is wrong:
Instead of looking at where to buy or sell, look at the best probability for another wave. After 1) 80%. After 2) 50%. After 3) 30%, After 4) 20%

Basically, you wanted more data, and as you got it, it took so much time, so many trades, the real data was: "Run is over". Better to wait for a new, CONFIRMED, move.

Also consider having a shorter time frame so you can "look inside" those bars. Not all of them, but the interesting ones. The shorter time frame is to be used sparingly, otherwise you are essentially trading the shorter time frame. Also look for moves from 6:40-8:15 (PT), for the entry, those are the best times for major moves you wanted.

I don't know what others are talking about using different signals-indicators-tea leaves, smoke signals. All the information is there 5x. This was a low probability long. It was also a low probability short too.

Lastly, this might help the psychology part. Please read this carefully. "You have to become comfortable with uncertainty." It takes practice, and avoiding it by waiting for more "information-certainty" leads to anxiousness, and missing the right entries-exits. That being said, don't take trades just because you are uncomfortable, take them because high probability.

Consider making a list of all the reason why to go long or short (skip the "stay flat" for now). Assign a probability guess. Then take the virtual entry.

Several things will happen. a) the list will be too long, indicating lack of refinement. b) the items importances will filter out. c) you will realize, that one bar later after your virtual entry, there is an entire additional set of reasons. You need to reconcile a-b and c.

Hope this helps

 

[wildchild]

What is the translation of that? In simple terms?

Also interested in the translation,in reference to trading,if you have the time.

Nice quote.

The concept of "There is a tide in the affairs of men, which, taken at the flood, leads on to fortune" from Shakespeare's "Julius Caesar" can be very relevant to trading in financial markets. Here’s how this metaphor applies:

1. Timing Opportunities: Just as Brutus speaks of seizing the tide at its flood to reach fortune, in trading, timing is critical. Traders often look for the optimal moment to enter or exit trades to maximize gains or minimize losses. Missing these key moments can result in lost opportunities or increased risks.
   
   
2. Market Trends: The tide in the quote can be likened to market trends. Traders need to identify these trends early and make decisions based on whether they believe the trend will continue ('the flood') leading to potential profits ('fortune').
   
   
3. Risk and Reward: The idea of the tide leading to fortune if taken at the flood also involves risk. In trading, this equates to the risk/reward ratio. Traders must decide whether the potential reward of a trade is worth the risk, similar to choosing the right moment to act on a rising tide.
   
   
4. Market Sentiment: Just as the tide is a natural phenomenon that can be predicted but involves inherent uncertainties, market sentiment can often drive price movements unpredictably. Successful traders, like skilled navigators, must read these signs and decide when to act.
   
   
5. Strategic Decision-Making: The quote underscores the need for strategic decision-making. Traders must develop and follow strategies that capitalize on market movements at opportune times, not unlike choosing the right moment to take advantage of the tide.

In essence, the wisdom of this Shakespearean quote can be a guiding principle in trading: success often depends on recognizing and acting on opportunities at the most opportune times.

Also see the buddist concept of Wu Wei. Get with the flow of things and stop buying at the wrong time.

 

[mute9003]

i am trading a penny stock i want to learn to trade penny stocks.
i enjoy the action and lm trading it with the intention that it is a quick pump and dump
the trade was initially a short term trade.
but this is also my self sabotage pattern i got stuck in this exact pattern many times. this same pattern is responsible for almost every single one of my losses.
the small spike which looks like its about to break out and then a slow death that looks like it might reverse but it just never does and i get sucked into this gradual downtrend. is that a noob trap?

 

[mute9003]

from what i gathered my mistake was not cutting my loss quickly enough when the breakout didnt happen because it was the boiling lobster screnario where it was not a fast drop but slow decline with hopium pullbacks along the way that sucked me into it?

im still reading more pages but its a mess with all the irrelevant posts and people having their own arguments inside the post. can yall move those into another thread please? they are probably good info but i didnt really understand any of it since im not focusing on those. im trying to figure out the mistake im making in my own trading.

 

[mute9003]

trying to answer and process all of this.

correct me if im wrong but the general idea is:
the earlier in the trend you enter the better your loss management needs to be because its greater risk of trend not going your way.
then there are people who enter at a safer area after a confirmed breakout where there are more confirmations of uptrend(BUT before it has gone too far up where you are too late in the trend and it again has a higher risk or reversal back down)

i watched cameron fous trade and watched few other traders who enter essentially same trend but at different points. which i described above. and im assuming that he is able to enter that same trend before it breaks out is because he has better risk management and is able to drop the sell hammer on it as soon as it doesnt do what he expected it to do.(please dont get into a debate about him and his trading this is not what im asking)

so what i did is i entered a trend with higher risk but didnt exit early enough because i got sucked into the boiling lobster trend..

 

[mute9003]

also i noticed thatthe news of increased amount of stock repurchase program released after the run right after it started going down. was that the planned dump after the pump where i got stuck along with other noobs?
im assumign that increase in stock repurchase amount is positive news and the fact that stock went down on the news it was a pump and dump?
i dont know what different types of news mean for the stock yet.. only wnat tim sykes talked about.since it seems liek hes the only one who talks about shitstocks like this.

 

[grithe]

Referring to the EW approach, it will miss many of the bullish moves because it will always wait for a 'clear A-B-C correction, a rectangle consolidation won't give that. On the other hand buying into an A-B-C correction will guarantee buying something that starts as a correction and turns into a trend change and then you have to revise the wave count because more often than not the assumed count will be wrong.

 

[panzerman]

Buy low, sell high is rational behavior, but the problem is that low and high are relative and not absolute. You need a method that distinguishes low and high, a pullback from a trend reversal.

IMO, that way to do that is with an oscillator indicator with zero lag. I've attached an article in a previous post that shows you how to do that.

 

[tomkat22]

I try to avoid stocks under $5 but I suppose if someone put a gun to my head and forced me to trade such stocks I'd use Ross Cameron's system. You know,get up at 3 am ET and find stocks that appear to be breaking out on news and try to jump in on the front side of the move. Those type stocks have usually shot their wad by the open but sometimes they will also make a follow up push later in RTHs. Happens 2 or 3 times a week(at least). CRKN, MLGO and ASNS are recent examples.