hi i just want some constructive feedback to as why my trade didnt perform the way i wanted it to please.
i took a trade on USD/JPY
i inteded to long this in hopes of a reversal to the upside, the reason i took this trade was that it was heading for global(external) support at 4H, CHOC was comfirming it an uptrend. however, a couple days later of pushing off the support level it reversed and continues down to the downside.
My thoughts were that i probably should have waited for further confirmaion such as potentially a H,HL on 4h instead of just a CHOC, as well the overall trend was downards too so going aganist that trend isnt good sometimes.
If you take any random point in a downtrend, the next thing that price will probably do is fall. You can divide the downtrend up into 20 steps or stages, or candlesticks, or 50 or 100, but this statistical rule will still be true.
You can increase the probability of a reversal by waiting for a breach of a previous swing high, or a close above it, or two closes above it, or a close above it plus a certain indicator reading etc. etc. but this delays the entry and raises the entry point, which undermines the potentially dramatic and immediate gain from a reversal, which is the whole point of taking a reversal trade. The point is you damage the very strategy you hope to profit from by trying to reduce losses which are structurally inherent in the strategy.
Plenty of people can help you after you’ve learned enough to be able to ask good questions and to understand the answers to them clearly, and you can do that (all free) by starting here (click the green link):
Hi, I trade with a much smaller TF so mine might not be the most useful advice in the trading world. Anyway. Were I to long that trade, I’d have loved to see some more confirmation before entering, because the downtrend was still present as you say (price still under MA would have been a no-no for me to enter long). Perhaps I would have waited for the price to cross over MA and looked for some strength signal or some inversion pattern for confirmation.
I love these technical discussions, especially when they’re out of my usual way of trading because they’re wonderful occasions to learn something. I’m longing to see some others’ opinions.
Nothing wrong with the trade. There is no way to predict future price movement using historical pricing, and the smaller the movement, the more unpredictable it will be. Any time your Stop level is closer to price than your TP level, you’ll have a win rate below 50%.
If there was an advanced way to predict the odds of price movement, your broker wouldn’t allow you to trade and they will not supply liquidity to a known losing trade on their end.
thank you for this advice, i agree stats and probabilities are 100% the way, i sometimes forget that. Its hard to battle greed and try to take the amazing entry and profit off a potential reversal/pullback when taking a trade to the current external trend is a less probability of losing which will guarantee a safer trade than taking the risker one.
i have implemented your advice by spreading the trend up into 50 sticks, i can see what you mean how price trends down in a majority, yes there is pullbacks and by definition reversals, however, price follows downwards
thank you, for your advice. i also was using smaller TF however, i waited for choc to occur on a HTF EMA 20 crossed over, however, other EMA such as 50 lacked to present that. maybe sticking with a higher ema may be the way to go
i somewhat agree with this, what i interpretate from you is to fade the shorter term which is what i took over the longer term trend which what i assume your suggesting. However, taking what you see of a chart may lead to certain emotions and biases by looking at the way a trend may form. I guess that’s why probabilism, mathematics and stats are the key because they are rational and logical responses to markets.
On the other hand, simply not using moving averages as trade entry parameters (though they undoubtedly have other valid uses) may be the way to go.
In my experience, this certainly seems to be a very widespread opinion among people consistently trading profitably (though undeniably it isn’t a popular opinion in beginners’ forums).
According to my analysis, there was only 1 CHoCH (I’m old school and had to look it up) and it was bearish.
IMO, there was not one single sign of a trend reversal from bearish to bullish. The trend is clearly bearish as shown by the parallel channel (I circled the coordinate points that established the parallel channel long before you put on your trade).
In the future I suggest adding a lot more notes, text, arrows etc to your charts (e.g. where is the CHoCH you’re referring to, which high did the CHoCH break above etc), to explain your thinking, it would make it easier for others to point where analysis mistakes were made and provide more constructive feedback.
Trade entry level is the least important metric. This is why your counterparty allows you to trade at any level. You’ll spin your wheels forever trying to guess the optimal scenario.
There is no bullish CHoCH (break above lowest confirmed high of bear trend) in the chart you posted.
On this particular 4H chart there is one and only one CHoCH and it’s bearish (break below previous highest confirmed low which validates the trend reversal from bullish to bearish) and it’s the one that I outlined.
No, not on the 4H chart.
This is one of the biggest problems with YouTube / Social Media “trading gurus”, they are rarely precise which is an absolute necessity for technical analysis. If you get sloppy with the fractal nature of markets, you are guaranteed to get extra false signals and losing trades.
For example, when someone says the trend is down the first question that pops into my head is “which trend? short term? intermediate term? long term? intra day?”
Another mistake that inexperienced traders make is that they use indicators for trading signals instead of what they were designed for: technical analysis.
Take a look at the red SMA in the updated chart below, it’s a smoothed 10(5) SMA, it lags even more than a normal non-smoothened SMA. But I don’t use it for trading signals, I use it for what it was designed for: to eliminate the noise and clearly show the trend movements, including highs and lows.
I circled the 154 low you’re referring to (if you’re referring to another low, please post a chart highlighting it), it was never confirmed on the 4H chart (the red SMA didn’t turn up) before another new low was made.
However if you go down to a 1H chart then the same 140(ish) low is clearly a confirmed low on the 1H TF and you get a 1H bearish CHoCH.
When looking for breaks above highs or below lows looking for a trend change then you must clearly define which trend you’re looking at and make sure the highs and lows are in the same time frame reference.
Yes i agree youtube and social media destroys trading, thats the thing as a young person at this game majority of people my age learn off youtube and social media which i try to stray away from and more towards baby pips and books/old documentaries.
i really like what you said here “Another mistake that inexperienced traders make is that they use indicators for trading signals instead of what they were designed for: technical analysis.” i think that is very valuable to keep in mind.
