To pinpoint a trend reversal you need to be absolutely clear about what is a trend - seeing some upward price movement does not always mean you are now looking at an uprend.
More than that you need to identify which trends and which reversals are useful for your strategy - a sudden counter-trend price movement does not necessarily mean the original trend is broken or that a new trend is now starting.
I am mostly a trend-follower, I only take reversal signals like Smash Days (Smash Days in forex).
For trend-following, I prefer to be on the long side of the main US indices and not right now - only when they are consistently rising. But in all cases I want to see price moving upwards from a recent swing low which is above the previous swing low. This means I am entering on at least Day 5 after the reversal, often later - from the bottom reversal or swing low I want to see 2 days up to a new swing high, then 2 days down to a new swing low (higher than the first one) and I will set a buy order at the high of Day 5 if it closes above the swing high.
If you noticed my entry condition for BUY and SELL trade. i am not going against the Trend. I am playing Buy Trade only for UpTrend (Current Market Price is Above EMA 200) and SELL Trade only for DownTrend (Current Price Below EMA 200). In recent changes i am using both EMA 200 & EMA 50 for better confirmation.
I am trading in direction of trend, i am Trading on Support/Resistance or Overbought/Oversold condition. Indirectly i am trading in small trend reversal but along with bigger trend.
Small drawing from my side to make you better understand :
I dont think that the amount of indicators is going to get you the desired results without really looking at how the market recently behaved. Indicators tend to distort the general market behaviour in my humble opinion.
I would advise to learn more about general market structure and how trends and ranging markets form and behave. I dont say that you have to trade without indicators but since they are built based on price and time, they can not really tell you something new which the price action cannot.
Maybe start trading simple support and resistance and if you want to use a take profit, then you could try to use a 1:1 system where your stop loss is equally spaced. This should put you in a territory where you will break even in the long run. And considering that maybe more than 90% lose money, that is not an all too bad position. From there, you can improve, maybe experiment with bigger take profit orders, no take profit orders, adding to your trades or a combination out of this.
trailing stops donât work. I donât know anybody who uses them that makes money. All youâll see is you give away a huge amount of your win to get stopped out for a small profit on wins and mostly losses.
Go back through charts. How often does a instrument move more than 600 pips without retracing 300? Thatâs what you need to break even.
Automated trailing stops, anyway. (There are people manually trailing a stop-loss, for example a couple of pips beyond each newly-formed swing-high or swing-low of the price, and thereâs nothing wrong with that at all - but thatâs not what weâre talking about, here).
Exactly.
I never have, in my whole career.
Itâs just nonsense.
You canât learn anything helpful from this, @shanmugapradeep , because (among other reasons) youâre testing the wrong things.
Part of the reason for that is that youâre trying to run before you can walk automate before you can profitably trade manually.
Forums (and Youtube) are full of people repeating the same misinformation about trailing stops over and over and over again.
Itâs what our pink-hatted friend would call a âtwo groupsâ thing. The big group of people trying to trade repeat all the myths about trailing stops. Thatâs why you see this repeated everywhere, and is why youâve made the bad mistake of believing it, yourself. The tiny group of people trading for a living wonât have anything to do with them.
Iâve already given the link below in one other thread, today, but in a way it canât be publicised enough, just because (in contrast to most of what you read here, on this subject) itâs actually right!!
I mostly heard from peoples who are highly experienced in Forex market, they always says to use Trailing Stop instead of Take Profit.
My Risk to reward is 1:1, 1:2 and 2:1
That not true, i have tested in manually before i coded into EA. if you check my original post, it about Manual Trade based on my entry and exit logic.
I agree, i do not use Youtube, Google or forum to copy exact same strategy or method. Instead it helpful for ideas and using it to build my own.
They may be âhighly experiencedâ but theyâre not making a living from trading. The one thing they all have in common is that theyâre very, very mistaken.
The successful traders with whose work I have some familiarity, myself, all use a fixed stop loss, never trailing. Some use a take profit target; others donât.
Trailing stops and targets are not âalternativesâ. Theyâre two different questions.
In my opinion itâs sensible to let the price movements, specifically the swings high and low by the prices, determine both the positioning of the initial stop loss and its adjustments, if any, during the trade.
I havenât heard of professional or profitable traders positioning a stop loss in accordance with a pre-set number of pips, and I canât envisage this being beneficial.
That varies. I donât think itâs so much an issue with right and wrong answers as the âautomated trailing stop questionâ is.
The simple, short answer is that you exit whenever your thoroughly tested, proven trading plan tells you to exit.
For example, if youâre in s short trade because your chart analysis has suggested that the price should start moving down pretty quickly from where it is now, then a valid reason for closing that position early would be simple âthe failure of that to happenâ.
If your trading plan doesnât tell you when to get out, then you need to do further work on it, but the exit has to fit in with the reason for opening the position.
Two things which I think may help you quite a bit are (first and foremost) a book called âItâs when you sell that countsâ by Donald Cassidy; and (secondly) this page : -
Other examples of âwhen to close positionsâ could include ATR fractions or multiples, according to timeframes, areas of congestion, next support/resistance levels, round âpsychologicalâ numbers, and so on.
Having a too-high reward-to-risk ratio can be a kind decision-delaying mechanism, the way some people use them. Just something else to be aware of. But itâs certainly fair to say that this question, in my opinion, is one of the more difficult ones in trading, and perhaps one with one of the widest possible ranges of answers.
