How to Trade Trend Reversals

Trend reversals are the holy grail of trading. They are the coveted tops and bottoms that represent the ideal entry points for opening new positions and closing existing ones. So here we discuss how to identify them and what risks there are when you try to “time the market” as experienced traders say.

Whether you use indicators, fundamentals or news it’s always a challenging task to find that exact point in time when a price has reached its highest or lowest point for a certain period. This is especially true for short-term trades that happen on the minute timeframes. The perception is that there is more randomness and noise that skew the price (temporarily) towards a level that doesn’t reflect reality. Some might argue that it holds true for all time frames.

In the video David discusses how to tackle these challenges. He also points at the signs you should look out for when looking for confirmation of a reversal, as well as the surrounding factors that should determine whether you open and/or close a position.

At Trading 212 we provide an execution only service. This video should not be construed as investment advice. Investments can fall and rise. Capital at risk. CFDs are higher risk because of leverage.