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What is your way of identifying trend reversals?

Discussion in 'Trading' started by ninZa.co, Sep 8, 2023.

padutrader
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Darc said:
Looks like almost everyone whose put forward their approach is right. Certainly Volume does play a part, particularly on longer timeframes.

I looked at Tom Demark stuff, still looking. He lost credibility with his famous statement "Tops form after the last Buyer buys" - Huh? No buyer then no Trade. But he does know his stuff obviously.

Welcome back @padutrader good to have one of ET's true Legends back!
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Welcome back @padutrader good to have one of ET's true Legends back!

left trading....came back mind cleaned of all the bull shit and fresh.......

Last edited: Sep 10, 2023

#41 Sep 10, 2023

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padutrader
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PPC said:
Yes, and no . . . yes, simple concept, but the win rate and R/R will be low.

I don't think that breaking a low after a lower high or a double top let's you know that a trend reversal has taken place.

The problem with the concept you’ve described is that:

Market tests highs all the time, and breaks the (recent) lows all the time, and therefore institutional traders play lots of games around those last lows to intentionally trap retail traders because the big players know that most retail traders will do exactly what you described, and therefore they’ll take advantage of that and shake traders, trap them, run their stops, and then reverse the price back up. (this applies to US equities and FX)

Waiting for the confirmation of breaking of that low seems more a trade-through trend entry. Experienced reversal traders are usually very good at reading PA, and therefore they can confidently enter much earlier to maximize the asymmetrical R/R, and at "breaking of that low" they will already have SL at break even, and/or taking partial profits.

If you wait for the low to be broken, then your stop won’t be in a logical place (unless you place it above the supply level in which case it will screw up your R/R and expectancy.

ABC (ab=cd) pullbacks break the lows with impulsive legs and this can fool traders, and then consequently the traders who shorted after the break of the low then get trapped.

If one needs to wait for a confirmation of breaking of that low, then in my opinion it would be better to actually sit on your hand and wait for a downside momentum to develop and then join the ride on the 1rts pullback (safe trend entry), since that way one would have better confirmation (due to more PA info being available), plus the first pullback lets you have tight stops in a logical place and thus retaining positive asymmetrical R/R, plus less chance of getting trapped in the institutional order flow.

Everyone trades differently, and nothing wrong with what you described, and if that works for you, then that’s good, it’s just that this is what most retail traders are taught and the big players know this, and they take advantage of this crowd behaviour to run the stops.

I believe that the most important factor for reversal traders is to understand how institutional order flow works (around key levels), how the big players (who move the market) are thinking, being able to watch the PA for signs of selling pressure (reverse for buys), and if the PA is consistent with the order flow dynamics, and if all these (and few other relationships) fit together, then that’s what makes the potential reversal trade come alive.
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that is why Brooks says scalp out.......if you are trading 5 min then this works for novices.......you can learn a lot more later
#42 Sep 10, 2023

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padutrader
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this in ES live is a perfect short term minor 'reversal' buy

#43 Sep 10, 2023

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destriero
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Welcome back!

#44 Sep 10, 2023

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schizo
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padutrader said:
that is why Brooks says scalp out.......if you are trading 5 min then this works for novices.......you can learn a lot more later
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Hey yo, Padu, where the hell ya been? This forum needs your sage advice.

#45 Sep 11, 2023

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ninZa.co Sponsor
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PPC said:
View attachment 322691

I challenge you @ninZa.co to start posting signals from your magic indicator real time.

Let us see how good (or bad) your expensive indicator is.

If it's any good, I'll buy it myself even a without the "$150 welcome gift".

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Thank you for your comment! Here is the link to our Live Trading playlist: https://www.youtube.com/playlist?list=PL9jQLxNMyJUCAZaJPec0Uql2eBDPf3NYk

You can check it out to watch our indicators being used in real-time trading. If you have any further questions, please feel free to let me know.

Last edited: Sep 11, 2023

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#46 Sep 11, 2023

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traider
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PADU!!!

#47 Sep 11, 2023

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murray t turtle
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ironchef said:
Question for you sir, does 50ma/200ma work in day trading?
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%%
DEPENDS =LOL
Works Well [both] in a cash metal business today, daytrade.
But that [non union]metals dealer takes old union made autos + smashes them in to his concrete, then gets a truck load of them, so most any moving average could work well

#48 Sep 11, 2023

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ironchef
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padutrader said:
Welcome back @padutrader good to have one of ET's true Legends back!

left trading....came back mind cleaned of all the bull shit and fresh.......
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padutrader said:
that is why Brooks says scalp out
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Cleaned of all the bull shit? What about Al Brooks?

Good to see you back sir.

#49 Sep 11, 2023

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ironchef
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murray t turtle said:
%%
DEPENDS =LOL
Works Well [both] in a cash metal business today, daytrade.
But that [non union]metals dealer takes old union made autos + smashes them in to his concrete, then gets a truck load of them, so most any moving average could work well
More...

All moving averages, MACD, RSI... work well in backtests. A different story when the rubber meets the road.

#50 Sep 11, 2023

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