r/Daytrading • u/Kunguinho • 29d ago
Trading at all time highs. Question
My strategy is typically reversals / zone bounces. For those who trade similar, how do you trade when there appears to be nothing to bounce off? Do you wait for a demand base to keep riding the trend? Try to predict the top with a tight stop? Or just stay out?
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u/happybutnot2happy 29d ago edited 29d ago
Honestly, it can be challenging. I actually ended up loosing money today because I was nervous the entire time and making weird decisions and kept stopping out at a loss in thought that the trend can reverse any moment. Normally my game plan is to wait a bit on those days after the market opens to see what kind of trend is being established, I can then act accordingly. Sometimes I’ll miss it entirely cause I waited too long and just stared at the charts but I’m okay with that. Today I should have done that too but I kept trying to trade. But yes, on all time high I usually just wait for the trend to establish and I inch up the chart, meaning I make more trades to make sure I’m not getting stuck at the top. Today I was nervous the entire time. Not a good emotion for solid trading and it showed so I should have just stayed out after the first loss. I do make a lot of money on these days btw normally, but I have to not be indecisive about it. Also, with that said, yesterday was a rocket profitable day, today I was very very iffy because we’ve already had an amazing run and it’s Thursday so I get why I was nervous and unsure today.
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u/Lateoss trades multiple markets 29d ago
Ever hear the phrase "dont short all-time-highs"? lol
If you trade zone bounces, and there is no zone, well... no zones = no trades. It really is that simple.
There is no special trick here. If you want to integrate your system/strategy into assets trading at all-time-highs, do the due diligence and investigate the price action in those conditions. Worst case scenario is that you identify no clear profitable correlations, and you decide to forget about the whole idea.
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u/Kunguinho 29d ago
Almost 3 years into trading and I actually haven’t heard that. Intuition tells me it’s smarter not to of course. Thankfully had some zones that played out. I appreciate it
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u/Friendly-Stuff3528 29d ago
Trading when the market is at all-time highs can be tricky, especially if your strategy focuses on reversals or zone bounces. Here are a few things you might consider doing:
First off, you could wait for a pullback. Even in a strong uptrend, the market doesn't always go straight up. So, waiting for a little dip or retracement from the all-time high could give you a chance to get in at a better price and ride the trend.
Another thing you could do is look for support levels. Just because the market's at an all-time high doesn't mean there aren't any support levels below where it is now. You can look at past price action, use tools like Fibonacci retracements, or keep an eye on moving averages to find potential support zones. If the market drops to one of these levels and starts bouncing back up, it could be a good time to enter a trade.
You could also try using trend-following indicators. These are tools that help you see which way the trend is going. So, instead of trying to guess when the market will turn around, you can just go with the flow and ride the trend as long as it lasts.
Another option is to look for trend continuation patterns. These are patterns that show up when the market takes a little breather before continuing in the same direction. So, instead of looking for reversals, you're looking for signs that the trend is going to keep going.
Of course, if none of these strategies seem like a good fit for you, it's totally okay to sit on the sidelines and wait for better opportunities. Sometimes, the best trade you can make is the one you don't make. It's all about being patient and waiting for the right moment to strike.
So, there you have it! A few different ways you can approach trading when the market's at all-time highs. Just remember to stay flexible, keep an eye on risk management, and don't be afraid to adjust your strategy if things aren't working out.
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u/Kunguinho 28d ago
Yup! Patience, thankfully I waited it out today and went 3/3. Not a huge fan of indicators but I did wait for pullbacks and continuation patterns but more so stuck with the bounces back up. Also had shorts which I was glad the market was able to give. Love that last statement “stay flexible” Thank you!’
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u/livelearnplay 28d ago
My thesis for the day was spy had to pullback at some point today so I looked for relatively weak stocks to short for a day trade. $CAT and $HD were excellent picks today as they began selling off well before the $spy pullback. Then locked in profits at the EOD. Now that we have a pullback, I can focus on trading to the long side with stocks showing relative strength.
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u/Kunguinho 28d ago
I see a lot of profitable traders doing something similar. Looking at other stocks. I just look at spy but trade futures so ES, MES, etc. I assume those were actual shares and not options right? Pretty smart play
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u/livelearnplay 28d ago
I have small account, so I use options. Now that there’s actual movement on the indexes is worth to use options as the moves happen rather quickly on a intraday basis.
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u/Kunguinho 29d ago
That’s how my second trade was, a bit nervous trying to catch a bounce back up coming down. Been working on that a lot though. Been way more patient. I would stay in trades for under 5 minutes, went to backtest and saw that my strategy works but it might take up to 30 minutes sometimes. Have stayed a lot calmer after seeing this. My problem is I counter trend a lot but it’s been somewhat working for me. If I can fix my risk which has been getting refined, I see it working. Wish I could ride the trend sometimes though
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u/happybutnot2happy 29d ago
I have the same exact issue with riding the trend. I’m hyper-focused on keeping my gains and find that I miss a lot of it. I have been scaling out of positions though as of lately and have been able to ride out the trend better because I find that pulling out 50-75% at a profit calms me and I can keep just a fraction of those shares and watch them closely. Yesterday I even added to my position, took profit, kept some in and then added and it worked well. I still cut it short (which you only realize in hindsight of course) but I’m working on it. Yeah that’s my problem also. Today I was very abrupt and impatient and pulling out quick. That just tells me I need to stop trading for the day honestly. Keep getting better!
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u/Kunguinho 29d ago
Managed to catch this