I Can't Make a Friend of the Trend | Psychology and Money Management

futures.io - futures trading strategies, market news, trading charts and platforms

Psychology and Money Management

This forum is where successful traders spend most of their time and where struggling traders never visit. The psychology and money management forum is where you learn to become a profitable day trader


I Can't Make a Friend of the Trend

  #4 (permalink)

Market Wizard
Birmingham UK
Trading Experience: Intermediate
Platform: NinjaTrader
Broker/Data: TST/Rithmic
Favorite Futures: YM/Gold
ratfink's Avatar
Posts: 3,651 since Dec 2012
Thanks: 17,414 given, 8,376 received

Leon of Pizza View Post
This is a wholly psychological problem.

I happen to think it is a real perception problem - in a full on trend (at any timeframe) the chart on screen looks 'full' and the reversion to mean just 'looks' more likely.

For many of my charts I now automatically add +/- 20-30% of the day's range above or below depending on current price location, to allow space for the imagination to compensate 'where price could go' as opposed to where 'we think it is more likely to go'. Of course in a strong trend the 'could go' is in fact more likely than where we usually think. The irresistible force of momentum versus the immovable objects of support and resistance.

It is a similar situation with targets in trends, better thought of as places that might get hit and blown through with or without a pullback rather than places to trigger a full scale reversal, although they obviously can and do when the deck folds.

Travel Well
Visit my futures io Trade Journal Reply With Quote
The following 7 users say Thank You to ratfink for this post: