Reverse.......

robster970

Veteren member
4,566 1,390
My assignment in Europe is coming to an end shortly and I have been dialing back into trading again on smaller size than when I left it but just generally getting a feel for things again.

One thing has struck me which I never noticed up until Monday of this week.

When I take counter-trend reversals I just flatten when the move expires and I never consider hitting the 'reverse' button and taking a trade in the all-in direction.

I can only put this down to relief when I flatten that I am out of the market and the uncertainty has been resolved on a psych level.

Let me give you an example on today's trade on ES:

Long - 73.50 @14:49GMT, out at [email protected]:56GMT

All-in direction (by my own assessment) is short, based upon 30min chart.

If I had reversed I would be up about 3pts now and would be trailing the trend downwards, knowing it will likely test the low of the session again before it goes north....

So I am curious, how many of you out there reverse positions when you see an opportunity?
 
Last edited:

brewski1984

Senior member
2,073 356
I hate taking reversing trades straight after, it just doesn't feel right and then I do exactly what you've just stated: whether it goes up or down I end up looking at the chart thinking if only I'd done/not done the trade I'd be minted by now!

I guess if your plan and set up tells you to take it then you've got to take it.
 

barjon

Legendary member
10,705 1,809
Dunno what I'm doing replying to this while soaking up the sun in Gran Canaria. Sad innit? :LOL:

I guess it depends if your counter trend trade has just lost momentum - gone flat - sufficient for you to exit or has actively gone into reverse - by whatever means you judge that.
 

robster970

Veteren member
4,566 1,390
Dunno what I'm doing replying to this while soaking up the sun in Gran Canaria. Sad innit? :LOL:

I guess it depends if your counter trend trade has just lost momentum - gone flat - sufficient for you to exit or has actively gone into reverse - by whatever means you judge that.

But can you actually hit that reverse button?
 

barjon

Legendary member
10,705 1,809
But can you actually hit that reverse button?

Has been known:) I trade assumed trend continuation after retracement - ie: looking for the end of the counter trend move so the "stop loss" would be the point to reverse the original trade (as well as taking the loss). Has happened when the counter trend momentum has picked up strongly after the brief pause, but not standard procedure.
 

ACstudio

Active member
138 14
But can you actually hit that reverse button?



The Thinkorswim platform has a position reverse button. With a touch of a button it flattens one position and takes the opposite. I haven't used it but I'm guessing it is just a market order that creates 2 orders where one activates the other upon filling the first. You just end up eating the full bid/ask spread.
 

robster970

Veteren member
4,566 1,390
The question was aimed mainly at the psychology of hitting the reverse button rather than the mechanics of what the action does....
 

SpreadDoctor

Well-known member
318 59
The question was aimed mainly at the psychology of hitting the reverse button rather than the mechanics of what the action does....

the psychology of reversing a trade is a good talking point. For me the reasons to book profits (get out) are never normally enough for me to take a trade in the opposite direction. I could see how some scalpers might use this though. For example if there is an bullish opening drive from the open and then a bleed back to the opening price, this could be a signal for a bullish potential scalp from the opening price. If price isn't able to hold that opening price I can see why a lot of traders would want to reverse their position. For me personally I trade better when I wait for price to come to me rather than chase the market so I am unlikely to venture into these insta-reverse trades. GLGT
 

Pat494

Legendary member
14,621 1,579
Could easily get caught going the wrong way time after time chasing reverses. Yes they happen especially in an oscillating market but one needs to watch out imho
 

Triggerfish

Active member
229 14
So I am curious, how many of you out there reverse positions when you see an opportunity?
I think this is dependent upon ones point of view.

Before one enters a long trade, one would have analysed what one is looking at and formed a view that a long position will be of benefit before the trade. So you wait for that perfect entry point to enter.....ie. wait for the market to come to you.
Once entered, you may benefit from a small profit but where does it go from here? There is an expectation for price to rise...but....

soon the price starts to come down and beyond. This is not what was expected in the initial analysis of the long trade. The exit of position may differ depending on ones management/analysis.....but to take an entirely opposite view of the market, ie. to short right away isn't what was originally intended under the original analysis.
Hence it is therefore a very difficult thing to do to switch suddenly on an opposite direction. This is unplanned and an element of unknown is also at play because it was not expected in the first place.

However.....Should a view was initially formed that one was aware of what is possibly coming afterwards, this will be a different story. One would not have entered the long position in the first place and waited for the short position instead.
Again, it repeats itself, again and again afterwards.

This is like walking along the beach, seeing the current wave/tide coming in. At that moment, you know that the wave will continue and will die out and tide will reverse soon so you hop on that moment with that "view".
But the wave/tide isn't constant. What you don't see is the next tide forming and the subsequent actions. If you did, you would have known the limitation of the current "view".

Having a view allow one to be biased but one needs to be biased to have a position.
So to see an opportunity is to have a view before it happens so one can take advantage of it. It can't be an opportunity if you weren't expecting it, as in the case of reversal because ones view is still stuck with the original long position.....in the mind.
 
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ffsear

Senior member
2,250 496
My assignment in Europe is coming to an end shortly and I have been dialing back into trading again on smaller size than when I left it but just generally getting a feel for things again.

One thing has struck me which I never noticed up until Monday of this week.

When I take counter-trend reversals I just flatten when the move expires and I never consider hitting the 'reverse' button and taking a trade in the all-in direction.

I can only put this down to relief when I flatten that I am out of the market and the uncertainty has been resolved on a psych level.

Let me give you an example on today's trade on ES:

Long - 73.50 @14:49GMT, out at [email protected]:56GMT

All-in direction (by my own assessment) is short, based upon 30min chart.

If I had reversed I would be up about 3pts now and would be trailing the trend downwards, knowing it will likely test the low of the session again before it goes north....

So I am curious, how many of you out there reverse positions when you see an opportunity?


I do take reverse trades often. Especially when I see a an S/R level that i was expecting to bounce turn into a breakout trade. Yesterday on the dax was a prime example.
 

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darktone

Veteren member
4,016 1,084
The question was aimed mainly at the psychology of hitting the reverse button rather than the mechanics of what the action does....
No probs 'reversing' but its a rare event for me.
Ie the bias changes (big picture) and youre looking to position the other way. Id look to be limiting out what I currently have and limiting into the new, fading the short term, iie at prices in your favor.
 

robster970

Veteren member
4,566 1,390
I do take reverse trades often. Especially when I see a an S/R level that i was expecting to bounce turn into a breakout trade. Yesterday on the dax was a prime example.

Just looked at the chart you posted. Question is, did you bail on the short, wait for the pull-back for the long and then get in or did you hit 'reverse' at some point when you realised the short was offside and you were in a pullback to go long?

I think psych wise there is a big difference between the two scenarios.
 
 
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