Friday, 12 August 2016

Trend Bias CT Reversals

Amit hope this post answers your question:

Trend and Bias

Imagine this Scenario:
You have to catch rain water
You are in middle of road where buses are plying for both left and right side.

What will you do ?
First logical step would be to decide which side to go Left or Right.
This decision to go Left or right is BIAS.

How will you decide which side to go ?
1> You will check which side it is raining heavily left or right , by check weather forecast, Call friends on both side... etc.

Similarly in Trading you need to decide which side to go LONG/SHORT --> This is BIAS.
How will you decide which side to go ?
By assessing Trend. Which ever side the Trend is strong you go with that.

How to asses Trend Strength?
3 Methods
1> Look how ranges are forming one above another or one below another
2> Look at Impulsive and corrective wave
3> PDH --> Above / Below.

CT and Reversal Trades#
CT --> Counter Trend Trade
If you Try to take Trade at A, B it is CT Trades, Very Dangerous Never do this.
If you initiate Trades at 1 and 2 they are Trend Trade. 
Analyze Trend and create the Bias and Stick with it.

Reversal Trades#
This will be CT trades but the Context give indication that Trend may reverse

1> CM is long , that is max number of traders participated in the rally because of small regular pullbacks
2> Fluid area will be created (no BW kind of waves in the range).
3> Trend shows weakness near DP and Give a BOF near to it.

This is the Time you look to take Reversal Trade (Remember this is CT). But Risk to reward will be quite huge. 1:10 may be more some time. So you pull the trigger.
Managing the Risk.

Hope this helps..


  1. Sir,

    Write is very good, I have a query suppose if Breaking of 8700 happen around 1:45pm just 1 hr before actual that happens on Friday & there is same pullbacks(means no orderly pullbacks) then BOF trade of 8700 DP should considered as CT or Trend Revesal? & whether one should short here or Skip considering R;R ratio?

  2. Didn't understand your question ? Please elaborate with screen shot.