Quote:
Originally Posted by newboyo
Hello,
Ofttimes, after a downward cross (or upward cross), the next candle reverses upwards (or downwards) i.e against the signal.
Sometimes, the price continues in the direction of the original signal, but after moving against my position (and stopping me out  ), at other times, the price reverses.
I have been watching the charts for the past few days and attach an example of some such fakeouts.
Any suggestions for avoiding the fakeouts - other than stop? |
Hi mate, yes there is a better way, if you see the trade going against the cross, you have ONLY two options.
1) Is to get out of the trade, personally i don't do this immediately, as you say the fake out could be a double-fake out, so i find it best to wait a little bit by using option 2.
2) Check your lower time frames. So if your trading on 30Min, check your 15 etc......
Let me give you an example....
You are trading on the Daily, you see an EMA Cross..... and the stochs/CCI indicate a move to the downside.
HOWEVER, you look down a timeframe to the 3-4Hr and discover that the stochs and CCI are indicatating a clear move to the UPSIDE!!
So ya daily is telling you down, your 3-4Hr is telling you up!
Now, what i do in this situtation is go with the 3-4Hr.....why?.....because i know the indications given by this timeframe are going to be "acted out" by the market quicker than would the daily.
Personally, i would keep a close eye on the trade, put my TP on the middle Bollinger Band line first, then once reached, i would trail my stop in the hope that it reaches the top Bollinger band line.....all the time watching its ctochs and CCI.eventually they will be topped out giving you a downside signal ...this would obviously then MATCH the Daily signal.
This particular trade i have just spoken about would have been a "fake out" because you would have had your EMA Cross on the daily, but it would have gone against the indication..at least for a good few hours.
This what i mean by looking at your lower timeframes to determine if you should exit or stay in..........all the information is there.
Just as an added bit of info for you, not sure if this helps at all..........but when i am looking to ENTER a trade i work from the highest timeframe down to the lowest to guage my best entry point.
When i am already IN a trade i will go from the lowest TF to the heighest to guage how far my trade is gonna go.......it's pretty simple.....if you are selling on the 5Min chart, you are aiming for price to hit the bottom b/band, if it does on the 5mins, look on the 15min, if that is hit, look on the 30mins etc...
Hope this helps mate.
P.s
Despite our best efforts you ARE going to have losers.
But being careful and reading the signals gives you a much better win/lose ratio.
Out of my last 19 trades i have had 4 losses.
That's pretty good no?
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