Picking Tops.

Discussion in 'Trading' started by Dackster, Nov 18, 2006.

  1. How do traders know when a top is approaching?
  2. romik


    why don't you study charts with TA of S&P500, DJIA, NAS, DAX, FTSE, CAC, etc on various time frames from daily upwards of the times when these indexes have topped/bottomed and what are the comparisons that can be seen? When you do that look at the chart of S&P again and you will realise that it's not ready for a reversal based on TA (pullback is a different matter), fundamentals are reflected in charts, so not much call for researching the eco data, chances are you won't understand it fully anyway and what's more important the effect it has on the markets. Absence of follow through beyond 1408 and an intraday double top do not mean that the market has topped, intraday perhaps yes, but making a statement that points out absence of bulls on Friday can be argued by saying that there were no bear action either.
  3. jessop


    How do traders know when a top is approaching?

    They don't - They wait patiently for their signals to confirm the resulting lower high and short the arse off it.

  4. most dont. its a lot harder to pick tops than bottoms.
  5. so when it comes down to picking tops, there is no real concrete or catagoric evidence, no absolute way (except for when the trend has changed/hindsight). Why do people do it then?
  6. sure there is. the double top on the s&p was a potential entry for a reversal . i took it, lots of people took it. when it was violated, you hit your stop , lick your wounds and move on. a lower low on a bigger timeframe is another entry (say confirming weekly lower low and daily lower low) - gold was an excellent example of this if you take a look of the weeklies and dailes on a 6 month chart.... other ways too but these are the best imo

    it is always easier to take pieces of the middle of a trend in my opinion but if i see a top formation ill take it...
  7. jwecme


    Most traders will tell you that the secret to picking tops and bottoms is a combination of market experience and feel. No technical indicators can tell you exactly where it will be. If the market is selling aggressively intraday but longer term the trend is up and you get very oversold stochastic at a key support area it is normally good for a pop bounce. If you have the same situation in a Downward longer term trend then it will likely smash straight through and keep on going with increased velocity thanks to the extra sellers who panic out of their recently acquired longs.

    It is about knowing market conditions understanding the fractal nature of the market good use of technical analysis that you have seen in situation after situation. I think most sensible traders do not try to actively short excessive strength or buy excessive weakness, it is much more useful knowing the potential bounce areas to exit trades and reassess your position.
  8. picking a top or joining a trend, which is riskier?
  9. socalpt


    When you see high volume, it's either time to buy or jump fast. Most traders use the crossing signal between MA 10 and 30, some use 5 and 35 as a signal to buy or sell.
  10. romik


    OK, switch on a rap background track and eminem this you aliashole:

    Whyohwhy sat on a wall
    He decided to short and not to be long
    He was so sure S&P has topped from now on
    He put all his dough on a Monday short call
    On Monday S&P has declined to a 2 day low
    Whyohwhy proclaimed he was right wow wow wow
    When S&P reversed and bulls came charging in
    They took his dough, his car and his ET log-in
    #10     Nov 18, 2006