How to spot reversals: Patiently waiting for the signal is key

Fundamental and technical bias was short all day. All long signals should have been avoided UNTIL a solid reversal signal emerged. Trying to pick the bottom all day would have resulted in stop after stop. A) when you're pushing lows, the higher probability trade is to short the lows vs. thinking final low of day was put in.

In a down trend you will eventually get a reversal signal. This tells you two things: 1) You should exit your short position and 2) consider long positions since bias reversed to the upside. The most important thing is to wait until this happens.

The key is for the signal to generate enough of a move in your favor for you to move your stop above entry so that you are risk-free. If the move breaks down and it was a false or shallow reversal, you're risk-free and cannot lose money on the attempt since you got stopped out for a slight profit! So it's worth recognizing the signal and taking a shot at a high probability trade.

Here is a real-time example:

Stop is placed below lower high initially, once market moves in your favor, move it above your average price no matter what.

Please feel free to jump in with your opinion.

HT