follow existing trend or pick reversal

Discussion in 'Trading' started by misterkel, Mar 12, 2018.

  1. tommcginnis

    tommcginnis

    One of the better option-trading descriptions I've read in a while.... :D
     
    #11     Mar 12, 2018
  2. You can do a statistical analysis on trends to find likely time of day for reversals, age of trend analysis, and price bar analysis before a reversal. This may give you a little bit of an edge.

    A better way, but requires considerable experience, is to be aware of new changes in price action. For example, in an established downtrend, are the bids now starting hold up well against hits? Especially during SP500 futures selloffs? Is the offer not as immutable to takes anymore?

    An acceleration of the underlying trend and volume is a strong sign of a pending, at least short term, reversal. This is a subjective determination on the traders part, as such, also requires considerable experience to consistently trade this method for profit.
     
    #12     Mar 12, 2018
  3. tommcginnis

    tommcginnis

    I agree with most of your post, but what you've described here (greater price movement on greater volume) is one side of the market hitting the gas pedal, and the other side hitting the brake. Reversals are composed of lesser price movement on greater volume -- in racing parlance, somebody "lifted" relative to the other side.

    (Not to quibble or anything....:rolleyes:)
     
    #13     Mar 12, 2018
    birdman and lcranston like this.