Sunday

Lessons from the live room: why traders attempt to pick tops and bottoms


click on the image to enlarge
Take any chart and ask yourself “where were the best areas to enter long and/or short?” and inevitably you’ll identify the turning points in the market because after all, they were the areas that offered the most reward.

It’s human nature...

to seek out the highest rewards and this has spawned the development of countless indicators and “methods” designed to pick turning points. Worse still is developing traders’ continual attempts to seek out the “best trades” by focusing on trying to pick bottoms (for long trades) and tops (for short trades).


The reality of attempting to pick tops and bottoms is losing money. It will come off on the odd occasion, as will running a red light at a traffic intersection; but implementing either repeatedly only ends in pain.

So what does the alternative look like?
The trades shown above are from today’s live trading room during the Asian session and highlight how despite not picking a single turning point in the market, we have had a profitable day by continually taking profits from pieces of moves.