Trend Reversal Trading Strategy That Works
"How can I find and trade tops and bottoms?"
It's one of the most common questions I get from beginner traders.
The simple answer:
Follow technical analysis strategies and reversal signals that are proven to work.
Doing technical analysis of the chart and finding levels where most traders will trade breakouts.
Then patiently wait and watch how price moves when the "breakout" happens.
If the breakout fails and you get a reversal signal, you have a high probability setup.
Tops and Bottoms Technical Analysis
The technical analysis for this strategy is very simple.
There are two ways to spot this tops and bottoms reversal strategy:
1. A horizontal support or resistance level
2. A sloping support or resistance level (trendline)
The connection points for these levels are tops and bottoms.
You need minimum two bottoms for a horizontal support line or trendline support to be drawn.
How To Find Trend Reversals
Follow the technical analysis strategies above and wait for a 10X reversal signal.
Trailing Stop Loss For High Risk Reward Ratio
When you trade reversals and looking to trade a nice price move.
I prefer to use a trailing stop loss to stay in the trade as long as possible.
Without risking to let my profits vanish if the trade reverse against my position.
The Moving Average Exponential (Length 8) is great for that.
After you have added the EMA to your chart, change the Length to 8 in settings.
You can stay in buy long trades as long as price doesn't close below the moving average exponential and then move below the low of that candle (see more examples in the video) after a break to new highs.
You can stay in sell short trades as long as price doesn't close above the moving average exponential and then move above the high of that candle (see more examples in the video) after a break to new lows.
double top and bottom strategy
The double top and bottom strategy is a very popular reversal strategy.
Therefore when it fails, a lot of traders will be in losing positions and adjust their positions.
This will create good volume, high volatility, and potential strong price moves to trade.
Most often, it will be beginner traders not knowing the right time to trade the double top and bottom.
For example:
The beginner trader spots a double bottom and enter a trade when price makes a new high.
By the way, that's too late.
Stop loss is placed below the double bottom low and take profit at risk reward ratio 1 (because the beginner trader doesn't understand the importance of trading with a good risk reward ratio yet).
Then price immediately reverse and the beginner trader is stopped out for a loss.
That's not all...
Price then reverse and and makes a 10X signal indicating that buyers are in control.
The beginner trader, frustrated because of the loss, don't want to take a new position.
"If price get back to the level where I got stopped out I will buy."
But price keeps rising creating higher highs and a strong bullish trend.
bottom picking strategy That Actually Works
What is the the reasons this reversal strategy actually works?
It's because traders who trade the double top/bottom or the breakout are in pain when price reverse.
Let me explain.
The market looks like it's trending, making a pause at a level and when that obvious level breaks, breakout traders rush in and take positions.
But when the market then reverse and we get a 10X reversal signals.
All those breakout traders are now in losing positions.
In panic, they close their losing trades giving more momentum to the reversal signal.
Do You Want AccurateTrend Reversal Signals?
I'm a family guy in my early 30's who learned how to trade the markets in a simple yet effective way. During university, I studied investing and graduated with a master's degree in risk management. Quickly, I realized that I was onto something. I started helping friends and taking students. My students started getting results, spent less time in front of their screens, and their accounts grew consistently. Learn more about me here.
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