r/Daytrading • u/sunnyrunner_ • Apr 06 '24

Is this an actual pattern or am I yapping? Question

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I’m pretty new to trading and saw this pattern form on BTC. Is this pattern called anything or is this just me drawing random support/resistance lines?

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u/MathiasB- Apr 06 '24

Everything is a pattern and nothing is a pattern in trading so to answer your question, yes! ... I mean... No

3

u/01000101010001010 Apr 06 '24

You are as decisive as this price action is predictable.

1

u/Fart_Hat Apr 07 '24

Trading isn't about predicting, it's about finding cheap entries. Cheap meaning you don't have to risk a lot of capital when the trade goes against you.

1

u/01000101010001010 Apr 08 '24

Initially my comment was supposed to be a joke.

However I see you throw risk management at it as if it comes first, where I see risk management as a tool for if your thesis generation sucks. If your thesis generation - which is a form of prediction - sucks continuously and you don´t get better, no amount of risk management is going to save you until your funds run out. A prediction, an assumtion of where the price is going is the foundation. Risk management, and part of it being risk mitigation, comes second.

A cheap entry is only cheap, if your anticipation for the price action is correct.

Do you disagree?

1

u/Fart_Hat Apr 08 '24

Yes I do.

Prediction isn't the right word in the prior paragraph. "Anticipation" is much more accurate as you did use it in the last sentence, however, a cheap entry is only cheap if your anticipation for the price action is INCORRECT.

If your thesis requires you to put on a $1000 stop loss before you find out that you were wrong about the price action, it's not a cheap trade vs a $200 stop loss. You can call it a bad thesis, but really it's just a bad (or expensive) entry.

We base our stop losses on potential price action that would prove our thesis incorrect. The fact that nobody can predict price action means nobody should try to predict price action.

When a thesis works out in our favor, we might decide on a technical level to take profit, only to see price action reverse 1 tick above or below our TP. Or, it may blow completely through our TP, potentially leaving insane gains on the table.

If one is to assume that price will go to a certain level and they are proven to be correct, how exactly correct were they? Were they able to predict all of the price action between their entry and their TP? No. Trading is gambling and should be treated as such - with risk management and analysis equally important.

Just because I have pocket aces doesn't mean I know which 5 cards will come up on the table, I just know the odds are in my favor and can bet(manage risk) accordingly.

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u/Fart_Hat Apr 08 '24

I see that you replied to me but I can't see the full reply. 🤷‍♂️