The 3 things you must pay attention to when trading reversals.
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Hey hey: what's up my friends, so in today's training you will learn the three golden rules right that you can't ignore when it comes to reversal trading so rule number one. Is this don't stand on the rocket ship? What do i mean by this right? So let's say the market is hitting up higher in an uptrend, and now the price is kind of like in the middle of nowhere right. So it's kind of like a rocket ship. You know propelling up higher and imagine this right.

You are standing on top of a rocket ship. Do you think that your weight will cause the rocket ship to you know reverse down lower, probably not right. The rocket ship will shoot you up to space and you run off oxygen and you're dead air right. So don't stand on top of a rocket ship, because what is likely to happen is that the rocket ship is likely to continue up higher.

So likewise right when you see the price heading down lower in this manner like this, don't try to catch a falling knife. Don't try to buy at this price point because, what's likely to happen is the market is likely to continue down lower? So that's why they have the same. You know don't catch a falling knife, because if you do so lightly, you know you will cut your hand. You bleed bleed to death date again, so so what should you do in this instance? So this brings me to rule number two lean against price structure.

If you want to trade reversals in the market lean against price structure. So how do you lean against price structure? So, for example, let's say the market is in an uptrend right, we say: don't sell right when the price is kind of, like you know, heading into space in the middle of nowhere. Instead, let the price make a pullback first, because, as you know, right no market goes up in one straight line. It makes a pull back continues up, higher pulls back continues up higher, so wait for the pullback to come when the pullback comes, and the market now approaches the highest.

Once again, there are two things that could happen: number one: the price just simply breaks out of the high and it continues higher. And if that happens right you stay on the sidelines, you don't shot the market, you don't risk a single cent number two. What could happen is that the market approaches the highs and then quickly got rejected like this, maybe looking something like a shooting star pattern like this now at this point right when this happens, let me just redraw that, because it's a bit messy okay. So let me just do it again, so the price re-test the highs, and now you have like a shooting star pattern like this.

At this point, you have a bearish price rejection, maybe because the buyers saw that the price is approaching the highest, they look to take profits. There was that causes uh, some selling pressure in the market. Maybe the short sellers saying the price you know: uh failing the heist looking to shot the markets. Whatever the case is you can see that there is selling pressure in this market.
There is bearish price rejection now this time now, if you were to shot the market now you have a price structure that you can lean against. You cannot actually lean against this highs or this high of this week right to set your stop-loss. So let's say you shot the next candle open. You can set your stop-loss right, a distance above this high somewhere about here.

Can you see the difference now now you're referencing, a point right, a logical point on the chart right where selling pressure has uh has shown to appear, and you can use that to set your stop loss now, one of two things can happen: number one. You are wrong and the market continues up higher fair enough. You cut your loss and you move on. At least you know, you said: you'll stop at a logical place right where uh the market should have difficulty reaching or number two you time the market correctly and the market starts to reverse down lower okay, and this brings me to my third golden rule.

Right don't be greedy and by the way, if you're, enjoying this video smash the thumbs up button, if not hit subscribe. So now, what do i mean by don't be greedy, so often a mistake, many traders make right. Is that, let's say, for example, let's use the the uh downtrend, for example, right market pounds up comes down, lower form, a bullish hammer and they buy right. Then the market hits up higher and they're celebrating whoo all right.

You know i managed to catch the bottom right, it's time to ride the new up trend up higher, so they think the market you know, will continue up higher right and they can, you know, get a massive uh favorable risk to reward on the trade risking a Dollar make 20 and stuff like that, but that's kind of like fantasy. The reality is uh is what's gon na happen is that this is likely to happen. Okay, let's say market is the bottom. You manage to catch the bottom for whatever reason, maybe there's a nice bullish.

Price rejection market continues up higher right and at this point right, you want to consider taking profits, don't be greedy, because, what's likely to happen is that the pullback is uh likely to end and then the downtrend resumes itself. So don't be gritty right as a reversal trader you're not trying to capture the the new start of the trend from from head to tail you're, just simply trying to capture that one move that one swing in the market before the long term trend continues right. In the same direction - and you want to get out right before that happens, so these are my three golden rules. When it comes to reversal trading, number one don't stand on a rocket ship, don't catch a falling knife number two lean against price structure, so you can set a logical, stop-loss and number three don't be gritty and if you want to learn more right grab a copy Of this book here called price section trading secrets right i'll share with you, a practical price action, trading strategies and techniques, right that you can use to trade, the forex stocks and even crypto markets.
I'll put the link somewhere below this video. You can grab a copy right and with that's it. I wish you good luck. Good trading talk to you soon,.


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One thought on “Reversal trading: 3 golden rules you can’t ignore”
  1. Avataaar/Circle Created with python_avatars Online Explorer says:

    Can you train me bro ??

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