Hello Beijin, welcome!
Fire away!
What should we do if H1 chart is in the same direction of the reversal trend?
For example:
1. We found an up trend in the weekly chart.
2. We found a reversal candle (a bearish doji).
3. We go to the H1 (o H4) chart and draw a trend line. It is an up trend line.
4. We will wait for a break to the downside, and then open a short position.
Nice summary
However:
If the trend line in the H1 chart is down trend, should we open a short position immediately?
I think I get your question Beijin. It's a good one and if I was writing the ebook again I would include it! If I am understanding correctly, it's should we draw trendlines that slope in the same direction we are trading?
For me, the answer would be no. The trendline you draw should generally be in the opposite direction to the direction in which you are trading. So, if we are trading to the downside, the angle of the trendline should be sloping to the upside. Personally I might consider a trendline if it was nearly horizontal but not any further than that.
The reason for this is that we want to make entries that are clean and quick, so we can get our stop to break-even. You might note that as price moves in a particular direction, it consolidates and then moves quickly, consolidates and moves quickly. We want to get in nice and close to the point when price starts to move quickly. In my experience that occurs most often when, in a down-moving market, bullish trendlines break. And vice-versa.
What is the best angle for a trendline? Again, for me, I would say not too steep, not too flat, somewhere in the middle. But I will consider nearly everything
But as I say regularly, while good entries are nice, cutting the losers quickly and running winners for as long as possible is far more important.
I hope this is of some help Beijin. If I have misread your question, let me know, or post a chart as an example. We like charts in this thread!
No sweat
What Olu posted further back is extremely pertinent, and deserves repeating.
If the trendline you were watching has already broken and you were not there to trade it, you must wait for either a new trendline to form or a retest of the broken trendline.
That is your work for that day - the ability to recognise that it is time to exercise
patience, get up from the screen and walk away. If you start chasing the market and making entries willy-nilly, you are failing in your day's work. If you had a boss, he would sack for it - it's gross misconduct.
Sometimes we need to walk away from a trade even if its journey in the right direction has started
this is fantastic advice. The ability to do that separates the men from the boys in trading. It takes strength, discipline and courage to walk away. There is no glory in sitting at the screen taking stupid trades just for the sake of it. Go and spend the time with your family, cook a nice meal, do some exercise.
Save yourself for when the market is working with you, not against you.
