The Trend Reversal Trade, can it work? I have been trading the market for 10 years & the statistics in NOT in your favour, this type of trade has a low probability & trading is a game of stacking the probabilities in your favour. this is to be distinguished from investing; which is a whole different game.
Back to the infamous Trend Reversal Trade. This is the trade where most average home managed investors loose their money.
Lets put this into practice. Imagine following: A good name stock price is over
selling or maybe crashing with over balanced selling right into a demand zone. like WEED in this example on a (W) chart.
The investor buys a LNG position & thinking he purchased a Good company stock for a good price,
isnt that what balance & income sheet based fundamental trading teaches.
Now, all one have to do is wait for the trend to reverse price goes up & big profit. expect that a big pay off does not come, hope is mislead by a bounce in price due to the demand zone. before the prevailing trend continues its down fall beyond your ENTR price, the emotions kicks in & you are in the red profit zone.wtf.. I hope you had a stop loss in place. If you are following me those far, those trades are dangerous..learn from my many mistakes..Fuc*king Hope
What was my mistake? expecting a DZ to reverse the dominant trend & while this does frequently happen, and it is how market is created. but the futility is in the assumption that you can gauge the top or the bottom before the trend changes. I learned to wait for the trend to change without me then i ride the new trend. much like surfing a wave. ride the wave & trade the trend.
Back to the infamous Trend Reversal Trade. This is the trade where most average home managed investors loose their money.
Lets put this into practice. Imagine following: A good name stock price is over
selling or maybe crashing with over balanced selling right into a demand zone. like WEED in this example on a (W) chart.
The investor buys a LNG position & thinking he purchased a Good company stock for a good price,
isnt that what balance & income sheet based fundamental trading teaches.
Now, all one have to do is wait for the trend to reverse price goes up & big profit. expect that a big pay off does not come, hope is mislead by a bounce in price due to the demand zone. before the prevailing trend continues its down fall beyond your ENTR price, the emotions kicks in & you are in the red profit zone.wtf.. I hope you had a stop loss in place. If you are following me those far, those trades are dangerous..learn from my many mistakes..Fuc*king Hope
What was my mistake? expecting a DZ to reverse the dominant trend & while this does frequently happen, and it is how market is created. but the futility is in the assumption that you can gauge the top or the bottom before the trend changes. I learned to wait for the trend to change without me then i ride the new trend. much like surfing a wave. ride the wave & trade the trend.