I've been talking to a lot of traders over the past week and it never ceases to amaze me how many of them try and pick the bottom of a trend and get burned. Yes, I realize that there are
some professionals out there who know exactly what market data to look for and are capable of spotting pullbacks of strong trends and profitably trading them over the long term. However, for the majority of retail traders, it's nearly impossible to do so. I realize that it's incredibly tempting to try and trade pullbacks; but you have to be careful. Picking the right entry and exit points can be incredibly tough. Just because the Euro and Aussie have been dumping since 4/30 and RSI has just hit 30 on the daily chart doesn't mean that EUR/USD and AUD/USD have to immediately begin a corrective move. In our news driven marketplace all it takes is another negative headline for the pairs to fall further.
My advice: Always trade with the trend. You may successfully trade pullbacks against strong trends some of the time; but trading is all about probabilities and long term statistics. I personally aim for high probabilities trades with good risk/reward ratios and always trade in the direction of the trend.
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