How to stop predicting the TOP

How do you know that these two days will not be just a small price cut?

 

Statistics. Daily returns are mostly normally distributed for whatever reason and the 25th percentile is -0.4%. So over 20 years you'll have a handful of days where you lose 10% and a handful of days where you gain 14%. Is today the day? Highly unlikely. But one day it will be. Take the hit and move on.



Quite often when I am long and the market starts going the other way, I just consciously ask myself what kind of day it is:



So far, nope.

Edit: Except the WW3 trade, that was an awesome day.

 

When a swing down is activated then it will be better just short

 

For any given 180 day period, it's better to be long. But it is almost a bimodal distribution. So can you detect when the market has changed? There are SO many ways. We're not there yet. One of you will correctly guess the top and think you're a genius but you're not.

 

That is what makes a market.

Those who think only one direction to trade and those who think gee price goes up and price goes down maybe just maybe I should consider both directions - within the daytrading scenario.

 

Can I make it any plainer - daytrading.

Of course on a particular day, or even multiple days, it can hit historical support or resistance. Or more recent support or resistance as well but beyond those particular days what happens in the here and now is what matters when ..... drumroll, you are daytrading.

 

If the market is not trending then how do you know if you have more possibilities on the long side or on the short side? In a fight of bulls and bears you can end up hurt

 

How do you define a trending market? Depending on the lag you use, the S&P is either highly mean reverting or barely trending.

 

The traders that I have seen through my career that did really well for themselves tended to be very humble when it came to their powers of prognostication.

In retrospect, I think that having a clean mental slate without a bias enabled them to very cleanly and quickly take a trade opportunity as it presented itself.

Point being - if you have a very strong opinion, you will have a very difficult time taking a golden trade set-up that runs counter to your innate bias.