Since making my first post, I read through a few hundred pages more and polished off the last 50, I’m pretty confident in starting demo trading now. I still have 2 things that I need to clarify though.
1st. I notice that some traders here don’t take a trade if the PA signal is within a consolidation box. For example, say price is in a downtrend, and retraces to a good support turned resistance area and consolidates for a few candles and forms a good PA signal. I notice that some people don’t take these trades. Why not? Is it because they might trade into the support of the lows of the consolidation box?
2nd. I know trading with the trend is the best, but there seem to be people “divided” on where the trend is actually going. For example, if the overall trend is downwards, but lately there has been upward momentum, some people will say it is still a downtrend, and some people will say there is upward momentum, so they will take longs. What do you do in this case? I know Johnathon says trade with short term trend, but what do you do if there is an overall downtrend but there has been 10-15 maybe even 20 candles of bullish momentum like in the above example? Does it depend on the strength of the candles?
Also what about ranging markets? I know Johnathon says to trade reversals at the top and bottom of the range, but some ranges are pretty big. So can you treat the movement of these ranges as short term up and down trends? For example movement from the top of a range to the bottom could take many candles, so can you treat this as short term downward momentum and “trade” with the trend?
I’ve added some charts to help explain what I’m talking about in my 2nd question.
For example on this chart I took from this thread. Let’s pretend that there had been an overwhelming downward trend, but then price had some upward momentum towards the pin. Would this pin still be considered a trade with the trend, since the overall trend is overwhelmingly down?
However let’s pretend that the trend has been weakly downward, would the pin still be considered with the trend since we had 17 candles of quite strong upward momentum?
Another example here. Let’s pretend again the overall trend is downwards, but we have a strong move upwards, and it seems to want to continue that way. Should we look for longs since we are only concerned about short term momentum and would we be trading with the trend?
On the other hand, if it is in a range or weakly in a downtrend, I wouldn’t have a problem looking for long trades.
Here again, should this 2 BR be considered against the short term momentum (it is quite strong)? Or since price is kind of ranging is it not as much of a concern?
Should this BUEB be considered against the short term momentum? Or since price is ranging and at the bottom of the range, is it not as much of a concern?
Sorry about this long question, but it’s just that one thing I really want to clear up for myself. Thanks to everyone for taking the time to answer questions and keep this thread going