I agree with Zeev that you never "know" until a while after. But I think that the most commonly accepted signal of a top is a sequence of failed retests of the top. I.e., succesively lower highs. This sequence begins with the "double top", where the second high closely approaches the first high, but doesn't surpass it.
Of course, this is no guarantee of anything. But even so, I think most traders use it as a signal, either to initiate a trade or to look carefully for other signs. You have to be quick on the trigger to kill a bad trade initiated this way.
In my trading decisions, I find I have two very big problems:
1. I give too much weight to the preservation of position opportunity, and not enough weight to preservation of profits and capital.
2. I give too much weight to my mental "scenario" for what will happen next, and not enough weight to the trend on the tape.
Comments, observations, anyone?
Land_Lubber |
