Hi guys. I want to clarify something that i guess i’m learning - specifically to do with tops and bottoms.
I have a £1000 account and am ok with 2% risk.
I’m having more success when entering trades that are trending by waiting for the price to peak in the opposite direction, or be at the extreme of the channel, and I seem to be confused about why it is said never to try and pick tops and bottoms, about how it’s a losers game and it’s where the hard money is - for as i understand my methods i must pick the tops in a downtrend or the bottoms in an uptrend in order to profit, because if i don’t pick a good time to enter then the market will go against me enough that my R:R is rubbish or that i spend most of the trade on edge as it hovers near my SL before either returning back or stopping me out.
Let me show you an example and give a little context.
This screenshot from my phone shows an example where i “picked the top” - at least that’s what i’d call it, if this isn’t picking tops and bottoms, then what is it that i’m doing? I analyse and place a pending order.
See, i’ve been eyeing up this pair for a while and belived from looking at the graphs and reading market sentiment that it is in a downtrend on the 4H timeframe, but kept watching as for 2 days it rose in price, I’m always trying to find the right time to enter and have been burned in the past by entering at a wrong time and spending nearly all of the trade in the red, or getting stopped out. I picked a time at a psychological level where i believed it would stick and reverse where it was at the top of a decending channel and i was right and this was a winning trade for me. People always say this is a bad idea but why?
When following the trend the price moves in waves on its way up or down, why would you not wait for it to be at the top of the wave before shorting and vice versa?
How do you guys trade the trend? Is my method flawed? Views welcome!