Is It a Reversal or a Pullback?

Next time you pull up a daily chart of the ES, take a look at where the lows/highs and close intersect (in uptrends) and then do the same in downtrends...tell me how many times you find that the exact high/low of the day is a PDH, a PDC, etc, etc...those levels are closely watched and orders are parked around those levels...Obviously in strong uptrends/downtrends, it might not even make it to the PDH/PDL before the reversal occurs...

 

If you could tell with certainty the difference between reversal and pullback you would print money at will, forget billions, you would be dancing in trillions and only stopped by liquidity issues.

Only way to tell when a pullback is now a reversal, with certainty, is after the fact.

Best you can do is play the expectancy game, and hope it ends positive.

 

Do you look at RTH prior day H,L,C or all trading including overnight?

 

Luckily, there are more pullbacks than outright reversals, hence higher expectancy with right money management skills?

 

Yes, I agree.

 

Is that realistic? I wrote already many times that Medallion, who does not make trillions at all, stopped years ago to accept new money and they were forced to distribute massively their profits as they could not manage all this money anymore. That is an example from REAL life.
The billions and trillions story is an imaginary, hypothetical story. So validity is zero.
I read today: World stock market losses are approaching $8 trillion so far this year. Which means that you could make 8 trillions in 1 month if you are always 100% right, take for each stock seperately all over the world the exact timing, and have ALL the profits from ALL the markets from the ENTIRE world. Sounds not so realistic to me.

With this I agree. There is never any certainty so you should always play the expectancy. But if possibel the system with the highest expectancy (if you have the luxury that you can choose).

 

Maybe off topic but still interesting enough to post here I think:
I daytrade, so I trade short term. I did an extensive test to see if using 24/7 data would give different results from using only the RTH data. It was a big surprise for me that in the long run there was no difference. Some days, using only on RTH data basis was more profitable, some days it was not.
From this I concluded that the effect of the overnight sessions have no real impact in the long run, at leats for my systems.
I don't know if this is also true regarding your question. Maybe do a test? (that's how you arrive at 10 thousands of hours of studying the markets).

 

This is obvious, because going from one reversal to the next reversal, 99% of these moves have at least one pullback, most even have much more. So number of pulbacks is always higher than number of reversals.

 

That's what I was trying to get at.
Well put

 

Here's a long trade I took a few days ago thinking it was only a pullback but it went on to be a 'reversal'
I had no way of knowing what it would do. All I knew is that we seemed to be trending up, we'd pulled back a little, looked to be resuming the trend and put in a higher low, and I went long....then got stopped.