Is It a Reversal or a Pullback?

J_Smith · Jan 23, 2016

schizo said:
This thread was created to get the creative juice flowing. My intention wasn't to freely give out my edge nor solicit the same handout from others. How you define a reversal or a pullback is solely left to your own discretion. I'm not here to "systematize" what a reversal or a pullback is.
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What makes you think that what you know, is not also known by others?

What exactly do you define an edge as?

J_S

J_Smith · Jan 23, 2016

schizo said:
The chart below illustrates just one of many that I would consider, it's very generalized so don't hold me accountable. But the overarching point is not to correctly know/predict where the reversal or PB ends but how the two are interrelated, so to speak.

View attachment 161004
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What you have posted is known as HWB, and is a very common way of thinking for many based on original text book information.

Can you please post a live chart of what you speak about.

J_S

J_Smith · Jan 23, 2016

Autodidact said:
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.
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What do you mean exactly by expectancy game, and can you show a valid example.

If you bring hope into trading, you do not know what you are doing, and should not be putting your money at risk.

J_S

J_Smith · Jan 23, 2016

wrbtrader said:
Here's the hindsight answer to your hindsight question about "I had no way of knowing".

Yes, there is a way of knowing and it involves being prepared if the price had continued higher and it involves being prepared if the price had rolled over southward (reversal). That's the issue with most traders...they are not prepared for both possible outcomes. Instead, they get married to one possibility and when the other outcome occurs instead...they get stopped out for a loss, breakeven or small profit and they sit there watching the price continue downwards with them on the sidelines just watching.

I sometimes called that type of trading as a trader trying to outsmart the market instead of trying to make a profit...a trader that's fixated on one outcome instead of being fixated on two possible outcomes. An institutional trader once called such "dynamic trading" when you're prepared to take action on both possible outcomes.

That pullback analysis you made at the moment of your trade was correct. Yet, you were not prepared if the price action "changed" after your entry regardless if it was 5mins later, 1hour later, 1day later or 1month later.

Then when that price action rolled over southward...that's the other outcome (Short position) and you were not prepared to exploit that outcome because you were only focus on one outcome involving the price pullback continuing higher to make you money on that Long position.

Therefore, the real question for you is this. Did you or did you not get a Short signal when it rolled over southward. This is something you need to seriously think about because a small profit, breakeven or small loss on that Long position is normal but missing that down movement is not normal.

Once again, the goal is to be profitable and not to try to outsmart the market because the market is always smarter than us but we can still make money via being prepared for both possible outcomes.

This is why its strange when I hear people say I only trade pullbacks or I only trade reversals or I only trade trends or I only trade range. Those are traders trying to outsmart the markets instead of being prepared for both outcomes when their trade doesn't work as planned.

Simply, don't get fixated on one outcome (trying to outsmart the markets). Instead, be prepared to be wrong and then be prepared to for the other possible outcome so that you can exploit it.

If you're prepared for both possible outcomes and you don't get a trade signal when the other outcome shows up...that's ok and you just wait for the next trade opportunity to show up.

P.S. I do understand you were only talking about one trade position (Long position as a pullback trade) and that its possible you actually did recognize later that reversal price action resulting in you Shorting soon afterwards. If such happened for you...you were prepared for both possible outcomes (dynamic trader).

That's why dynamic traders can be very profitable with a 50% win/loss ratio instead of trying to be right. They have a strong understanding that the goal is to be profitable and you can do that via being prepared for both outcomes.
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Your posts are very long, and most people will just pass over long posts.

Can you please shorten them and just state key points, or facts.

J_S

Chubbly · Jan 23, 2016

I am seeing a clear head and shoulders dinosaur pattern forming. You have to use weekly bars to see this clearly. Basically the tyrannosaurus will pullback and chomp you then he will reverse direction

wrbtrader · Jan 23, 2016

J_Smith said:
Your posts are very long, and most people will just pass over long posts.

Can you please shorten them and just state key points, or facts.

J_S
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The answer is NO and I will give you a nice explanation to why I will not shorten them.

My posts almost always contains different topics put into one post. Simply, I could just as easily make 2 - 4 smaller messages posts because they are different or I can put them all into one large post.

In fact, I use to do the above until someone recommended I put them all in one big post. I prefer to do the latter now. For example, this post is much smaller and only deals with one topic that's specific to you. Yet, had you discussed 2 - 3 different things...you most likely would have gotten a much longer reply from me. Simply, to get a smaller message...you should only talk about one topic.

To compromise with you, I will ensure all my replies to you are small and only deals with one topic even when you talk about several different topics.

J_Smith · Jan 23, 2016

wrbtrader said:
The answer is NO and I will give you a nice explanation to why I will not shorten them.

My posts almost always contains different topics put into one post. Simply, I could just as easily make 2 - 4 smaller messages posts because they are different or I can put them all into one large post.

In fact, I use to do the above until someone recommended I put them all in one big post. I prefer to do the latter now. For example, this post is much smaller and only deals with one topic that's specific to you. Yet, had you discussed 2 - 3 different things...you most likely would have gotten a much longer reply from me. Simply, to get a smaller message...you should only talk about one topic.

To compromise with you, I will ensure all my replies to you are small and only deals with one topic even when you talk about several different topics.
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But why go into so much detail when it is not required!

If the text books are right, why do so many fail to make money trading!

Surely there is something wrong, or are most people really that naive!

J_S

J_Smith · Jan 23, 2016

Chubbly said:
I am seeing a clear head and shoulders dinosaur pattern forming. You have to use weekly bars to see this clearly. Basically the tyrannosaurus will pullback and chomp you then he will reverse direction

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I asked you a simple question in relation to your monthly/yearly trading, to which you have not replied.

People can draw their own conclusions from your no reply, and you can easily stop that by replying.

J_S

der_kommissar · Jan 23, 2016

J_Smith said:
But why go into so much detail when it is not required!

If the text books are right, why do so many fail to make money trading!

Surely there is something wrong, or are most people really that naive!

J_S
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Your troll act is pretty obvious...

wrbtrader · Jan 23, 2016

J_Smith said:
But why go into so much detail when it is not required!

If the text books are right, why do so many fail to make money trading!

Surely there is something wrong, or are most people really that naive!

J_S
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You've actually asked two different questions and I will reply to each question in two different message posts so that each post is small to ensure you'll read both of them.