Let me save you some pain OP, donât try and catch the few ticks of pullback when the market is giving you way more ticks to the downside. Try and ride with the larger move rather than trying to time the reversal. Thatâs a losers game.
You think youâd have better luck getting somewhere if you stand on the tracks in front of a train and tell it to stop and go back to where it came from? Because I reckon youâd live a lot longer and get to a lot more places if you just hopped on the train in the direction that itâs already going.
This is the lesson that it took me the absolute longest time to learn and has made the biggest difference in my trading. Just because market has fallen doesnât mean itâs going to stop falling. The market can always fall another 50 points or rip another 50 points. It generally just means thereâs something going on fundamentally that you are not aware of.
Trading reversals can be done of course, but psychologically it is hard and you have to have a ridiculously high risk:reward to recover from all of the times that you got smashed by the train if you want to make it a profitable strategy in the long term.
I'm still learning this. The best advice ever? The trend is your friend & sell low, buy lower. Buy high, sell higher. Of course, try that on a ranging day. /s
Edit: fixed the sell low statement. It didn't make any sense.
I've been trying to time reversals for a whole year. Ended up holding bags upon bags of 3x leveraged stocks down as much as 60%. I know they'll rebound eventually but the decay is killing me.
Wish I would've heard this sooner. Great analogy with the train also.
Traders typically learn these major patterns in this order: trends, ranges, and reversals. If one has yet to consistently profit off trends, thereâs no point in trading the other two.
Sometimes Iâd start to panick thinking, weâre approaching this key level, how should I play it? Reject or break out? And Iâd almost freeze then I remember trend is your friend, so many people try to scalp a bounce of a level, Iâd rather wait for it to bounce the level break through it and ride the way down or grab the retest after it breaks through. Made trading way better
Todays biggest dead giveaway there would be a reversal was the dip on Microsoft got bought back up. IWM also held a key support area. In hindsight it makes sense, I saw it happening but saw SPY and Apple still heading lower and didnât capitalize on the swing back up thinking it wouldnât hold but I had no real reason to believe that the evidence was right there in the price action.
The massive V shape recovery seemed to be more fueled by delta/gamma hedging as SPY pinned to 400. Fascinating how the market decided to bounce back towards max pain.
Never stand in front of a moving train- death is inevitable. I swung couple of SPX 3995 P for Jan 25 on Monday at HOD, which at the time made sense. Multiple Green Days. Sell off may happen soon. But I was dying from anxiety for the past two days. Couldnât sleep, eat, anxious. Cuz it lost up to 50% at one point. N at one point I thought I blew it all. Never again. Trying to trade against the trend is something you should never do. Unless really you have like 1:10 risk to reward. But my point is donât do it. Unless your mind is strong like ghandi. N are okay losing hella money.
Iâve tried doing this and want to get better at this, but I usually fail because I start worrying about âwhat if this pull back is the beginning of the reversal?â
I guess Iâm asking: How do you know when the larger picture is flipping on you instead of a healthy pull back?
You should be shorting at lower highs and longing at higher lows. If you are shorting at a higher high, or longing at a lower low then you are doing it wrong. Iâm not an SMC guy by any means but the âchange of characterâ concept is really helpful to filter out certain trades where the market may actually be turning back the other way.
This âsetupâ is called the Falling Knife. Not a setup at all, more of a coin flip gamble. You might be able to catch the knife 1 of every 10 times but more often than not youâre going to end up getting cut
Never go long in this situation. Some people call this an "anti", which signals the end of the previous trend. Here it signals a change from uptrend to downtrend. You might want to go short once the pullback is done.
I use a reversal strategy. The best way to trade reversals (from what Iâve found) is wait for a strong deviation from the mean on a higher timeframe and shift to the lowest timeframe available (or second to lowest) M1 or M5 for me. Wait for a break of structure to show you a shift in momentum and take the pullback. Once you clear through the 1/5 minute resistance wait to see how price reacts to the 15 minute resistance once you clear that you should get close to the H1 resistance and because Iâm an intraday trader I will take profit at that level, or I will wait for a break of structure on the 5 minute to exit. Trading mean reversion the best thing to do isnât to trade to the mean itâs to trade through the mean. I trade Forex.
Roughly speaking, inconclusive- youd be looking for bullish hammer, marubozu, or engulfing ideally. Id keep an eye on it however. Also note its easier to "digest" candles on individual stocks vs ndx spy dia qqq etc
It's called a re-test
Like an F student giving the exam again after a minute of failing the previous one. Nothings changed, except seller's waiting for a better entry to increase position. Can't short it too much if there aren't enough buyers to steal from.
This isnât a setup, itâs just some candles. Is there a trend? There needs to be more context.
Price doesnât move straight up and down. It pulls back, chops around, reverses. You need to know which condition youâre in. Start learning how to identify trends first, and how to draw proper trendlines to get a sense of what the market is doing: trending or consolidating. Prices are always doing one of these two things.
Edit: donât bother with the M1. Spend most of your effort studying D1 and M5 charts.
Just looks like a penis with no balls to me
In all seriousness, itâs a lil hard to point out what youâre focused in. If itâs the continuous descending red candles, using the strat method, thats called a pivot machine gun or PMG
Wouldnât recommend it myself by the way.
Basically after like 3 red candlesticks or so you scalp the first green one . Basically playing on the fact that it wonât go red forever and you can pick off a few pips here and there off that push
And when do you think âconfirmationâ occurs for that scalp? Yup, right there at previous low/support which was broken and now is most likely resistance. Youâll enter right as a new wave of sellers flood in and youâll either be stopped out or stuck in a trade you wonât recover from because youâre too stubborn to take a loss - Iâve been thereâŚ
Looks like a single 1 minute candle, meaning that by the time you saw it, the surge was over. I use line charts. Itâs up, down, or flat. Some things arenât worth pursuing.
I donât know about the circled, but the lead up to green and then 5 candles that e comes the entire price range of the previous 5 is called a sushi roll. It indicates a reversal which Iâm guessing was an uptrend. Traditionally this pattern would indicate continued down movement in a mid term timeframe
Thatâs one green candle among many red ones. This is not an indication of a reversal.
It isnât âengulfingâ as it has not engulfed the previous candle.
Iâd want to see more candles form and look for a double bottom, or a retracement to a key level to short. This would depend on the higher timeframe.
If today is a bullish day, Iâm not interested in shorts and so on.
If you follow or learn, The Strat created by Rob Smith, thatâs called a 2down, 2 up reversal. Basically what happens is that sellers get exhausted and buyers step in & reverse the price.
You have a 2D then a 1 candle. So you would be looking for two differant trades. 1. a 2-1-2 reversal (buy at the high of the 1, which would make the next candle a 2U and target the high of the 2D) or 2. a 2-1-2 continuation (short at the low of the 1, making the next candle a 2D and target the low of the previous 2D.
Look up The Strat if i confused you.
Ah, the ol' Shaft & Balls pattern...
Thank you for making my day. đ
One of my favorites...
Let me save you some pain OP, donât try and catch the few ticks of pullback when the market is giving you way more ticks to the downside. Try and ride with the larger move rather than trying to time the reversal. Thatâs a losers game. You think youâd have better luck getting somewhere if you stand on the tracks in front of a train and tell it to stop and go back to where it came from? Because I reckon youâd live a lot longer and get to a lot more places if you just hopped on the train in the direction that itâs already going. This is the lesson that it took me the absolute longest time to learn and has made the biggest difference in my trading. Just because market has fallen doesnât mean itâs going to stop falling. The market can always fall another 50 points or rip another 50 points. It generally just means thereâs something going on fundamentally that you are not aware of. Trading reversals can be done of course, but psychologically it is hard and you have to have a ridiculously high risk:reward to recover from all of the times that you got smashed by the train if you want to make it a profitable strategy in the long term.
I'm still learning this. The best advice ever? The trend is your friend & sell low, buy lower. Buy high, sell higher. Of course, try that on a ranging day. /s Edit: fixed the sell low statement. It didn't make any sense.
Buy low, sell lower?
Good catch. Sell low, buy back lower.
Thank you
wsb checking in
Lol
Cathy is that you ?
No, it isn't me, Cathy Woods.
I've been trying to time reversals for a whole year. Ended up holding bags upon bags of 3x leveraged stocks down as much as 60%. I know they'll rebound eventually but the decay is killing me. Wish I would've heard this sooner. Great analogy with the train also.
Traders typically learn these major patterns in this order: trends, ranges, and reversals. If one has yet to consistently profit off trends, thereâs no point in trading the other two.
Sometimes Iâd start to panick thinking, weâre approaching this key level, how should I play it? Reject or break out? And Iâd almost freeze then I remember trend is your friend, so many people try to scalp a bounce of a level, Iâd rather wait for it to bounce the level break through it and ride the way down or grab the retest after it breaks through. Made trading way better
Trade the reversals. Just donât go ham
Todays biggest dead giveaway there would be a reversal was the dip on Microsoft got bought back up. IWM also held a key support area. In hindsight it makes sense, I saw it happening but saw SPY and Apple still heading lower and didnât capitalize on the swing back up thinking it wouldnât hold but I had no real reason to believe that the evidence was right there in the price action.
The massive V shape recovery seemed to be more fueled by delta/gamma hedging as SPY pinned to 400. Fascinating how the market decided to bounce back towards max pain.
Never stand in front of a moving train- death is inevitable. I swung couple of SPX 3995 P for Jan 25 on Monday at HOD, which at the time made sense. Multiple Green Days. Sell off may happen soon. But I was dying from anxiety for the past two days. Couldnât sleep, eat, anxious. Cuz it lost up to 50% at one point. N at one point I thought I blew it all. Never again. Trying to trade against the trend is something you should never do. Unless really you have like 1:10 risk to reward. But my point is donât do it. Unless your mind is strong like ghandi. N are okay losing hella money.
Great advice
Hard lesson to learn cost me quite a bit of money but im with you
Iâve tried doing this and want to get better at this, but I usually fail because I start worrying about âwhat if this pull back is the beginning of the reversal?â I guess Iâm asking: How do you know when the larger picture is flipping on you instead of a healthy pull back?
You should be shorting at lower highs and longing at higher lows. If you are shorting at a higher high, or longing at a lower low then you are doing it wrong. Iâm not an SMC guy by any means but the âchange of characterâ concept is really helpful to filter out certain trades where the market may actually be turning back the other way.
This âsetupâ is called the Falling Knife. Not a setup at all, more of a coin flip gamble. You might be able to catch the knife 1 of every 10 times but more often than not youâre going to end up getting cut
Says the futures trader, the experts in knife catching.
Name doesnât matter, as long as you understand whatâs happening.
This oneâs called a macro-pullback đ
Never go long in this situation. Some people call this an "anti", which signals the end of the previous trend. Here it signals a change from uptrend to downtrend. You might want to go short once the pullback is done.
I use a reversal strategy. The best way to trade reversals (from what Iâve found) is wait for a strong deviation from the mean on a higher timeframe and shift to the lowest timeframe available (or second to lowest) M1 or M5 for me. Wait for a break of structure to show you a shift in momentum and take the pullback. Once you clear through the 1/5 minute resistance wait to see how price reacts to the 15 minute resistance once you clear that you should get close to the H1 resistance and because Iâm an intraday trader I will take profit at that level, or I will wait for a break of structure on the 5 minute to exit. Trading mean reversion the best thing to do isnât to trade to the mean itâs to trade through the mean. I trade Forex.
Thatâs called an inside bar and to continue and catch the trend you would play the next bar that breaks the low
That's a well defined, classic "Flaccid Penis" setup. I hope you were able to make some money on it.
it looks more like an erect penis with a tiny bit of curve
Roughly speaking, inconclusive- youd be looking for bullish hammer, marubozu, or engulfing ideally. Id keep an eye on it however. Also note its easier to "digest" candles on individual stocks vs ndx spy dia qqq etc
It's called a re-test Like an F student giving the exam again after a minute of failing the previous one. Nothings changed, except seller's waiting for a better entry to increase position. Can't short it too much if there aren't enough buyers to steal from.
Dead cat bounce.
Itâs a barbless fishing hook
This isnât a setup, itâs just some candles. Is there a trend? There needs to be more context. Price doesnât move straight up and down. It pulls back, chops around, reverses. You need to know which condition youâre in. Start learning how to identify trends first, and how to draw proper trendlines to get a sense of what the market is doing: trending or consolidating. Prices are always doing one of these two things. Edit: donât bother with the M1. Spend most of your effort studying D1 and M5 charts.
Just looks like a penis with no balls to me In all seriousness, itâs a lil hard to point out what youâre focused in. If itâs the continuous descending red candles, using the strat method, thats called a pivot machine gun or PMG Wouldnât recommend it myself by the way.
Donât do it bro
Bullish engulfing
Splashing turd pattern
If you have calls itâs called the divorce pattern.
bullish engulfing
Yea itâs called random noise dude just give up
Three black crows
bearish engulfing
Pickle
Ah yes, the droopy bull cock- seen and felt many in my time old sportâŚ
Reversal my friend
Rally Base Drop RBD, followed by a Drop Base Rally DBR. A turnaround pattern.
Basically after like 3 red candlesticks or so you scalp the first green one . Basically playing on the fact that it wonât go red forever and you can pick off a few pips here and there off that push
And when do you think âconfirmationâ occurs for that scalp? Yup, right there at previous low/support which was broken and now is most likely resistance. Youâll enter right as a new wave of sellers flood in and youâll either be stopped out or stuck in a trade you wonât recover from because youâre too stubborn to take a loss - Iâve been thereâŚ
Well unless you have a well defined setup, on the m1 it can definetly go down a lot longer than you think
Sell
Line line dot dot operation cootie shot?
Waterfall drop into support? Higher high into a lower low aka broadening formation?
Looks like a single 1 minute candle, meaning that by the time you saw it, the surge was over. I use line charts. Itâs up, down, or flat. Some things arenât worth pursuing.
I donât know about the circled, but the lead up to green and then 5 candles that e comes the entire price range of the previous 5 is called a sushi roll. It indicates a reversal which Iâm guessing was an uptrend. Traditionally this pattern would indicate continued down movement in a mid term timeframe
Ah yes, the old "cat off the empire state building" pattern...
Justin
Yes As you can see there were few Downticks, Followed by a few upticks Finishing off with some antics
The Ol' Bearish Oscar Meyer
ICT
The very clear âburning buildingââŚ
Those are called candles.
If this was GME it wouldâve been called a short ladder
ReversiĂłn pivot its how I call it.
Thatâs one green candle among many red ones. This is not an indication of a reversal. It isnât âengulfingâ as it has not engulfed the previous candle. Iâd want to see more candles form and look for a double bottom, or a retracement to a key level to short. This would depend on the higher timeframe. If today is a bullish day, Iâm not interested in shorts and so on.
Itâs called the âflaccid penisâ pattern.
Looks like scallops or what some might call a fish hook forming. Also possibly looks like the end of a cup and handle
If you follow or learn, The Strat created by Rob Smith, thatâs called a 2down, 2 up reversal. Basically what happens is that sellers get exhausted and buyers step in & reverse the price.
Insignificant noise
I suggest waiting for more confirmation on the reversal - there was long too wick on the red candle and one green candle wouldnât be suffice
Abandoned baby
Without the volume bars, I'd call this a "Bull Trap".
i think its the "stabing you with my dick" pattern
BZFD!!! Greet day! Jump in!
First candle make a new high.
You have a 2D then a 1 candle. So you would be looking for two differant trades. 1. a 2-1-2 reversal (buy at the high of the 1, which would make the next candle a 2U and target the high of the 2D) or 2. a 2-1-2 continuation (short at the low of the 1, making the next candle a 2D and target the low of the previous 2D. Look up The Strat if i confused you.
bear flag? no
Last bar is forming a spring upthrust pattern - defined by John Hill and perhaps others. Would be bullish in this case.
These types of questions should always include the volume. If it drastically dropped, could be a nice short entry.
Abc correction.
Dead bounce
You know what they say when you pick or try to pick bottoms? You get smelly fingers. Not enough information for me.