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Hello Philip,
I only trade reversals. My two main reasons for doing so are that (if
you're correct) you can catch most of a move rather than just part of it
and, more importantly, every stop can be very tight because there is an
obvious and logical place to put it; i.e. once the low/high that
triggered your trade is breached, you're wrong and it's time to exit
stage left immediately.
A few suggestions for you:
1. Bollinger Bands - watch for a run up/down outside the band and a cross
of the price back inside the bands. Stop goes above/below the high/low of
the trigger bar plus one point. If the trend resumes and hits your stop,
just watch for a repeat of the set up and do it again.
2. If you're trading stocks, watch out for a volume climax on the high or
low of the reversal. If you see one, double your bet.
3. Watch for a reversal at fib levels. Everybody else is watching them so
you should too.
4. Use pivot levels. Same things applies. The beauty of fibs and pivots
is that they are amongst the few truly predictive indicators.
5. Divergence between the price and the MACD. One of the very best ways
of spotting an upcoming reversal. If you're too lazy (like me) to keep a
watch for divergence, take a look at Jose's MACD Divergence Kit. All the
hard work is done for you.
Trend following is only for the timid ;-).
Regards,
Kevin
At 22:30 23/02/2005 -0500, you wrote:
Greetings All,
By the time many of the more popular trend indicators kick in (moving
averages of various flavors and combinations, the MACD, the ADX and even
the PDI/MDI) the trend itself can often be nicely underway. This seems to
apply especially when price action takes a sharp turn, as in a
"V" bottom
or an inverted "V" top. The numbers feeding into the
calculation of the
indicators cause a lag. Gradual changes in direction don't seem to pose a
problem.
I'm not trying to call tops and bottoms, but even a minor jump on
conventional trend indicators would be helpful. To date, my efforts to
get
a handle on the initial phase of trends after sharp market turns have not
been rewarding. I can't seem to conceptualize it. Can anyone point me in
the direction of published thoughts on how one could approach this kind
of
market action? Or, would you be willing to share some basic observations
of
your own? I can't imagine that this question hasn't occupied many traders
at one time or another.
If I should simply "fugeddaboudit," well, that's a possibility
too. I may
be cross-posting this inquiry. My apologies in advance.
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