Post of the Day: Earlier Entries vs Later Entries

Student’s Question:
These patterns (Morning Star/Evening Star) seem to give you an indication of a trend reversal quite late on!
By the time the 3rd bar closes it seem that most of the profit potential is gone.
Is there a way of forecasting the reversal earlier by moving to a shorter timeframe (or am I missing something?)
Thanks
Power Course Instructor’s Response:
You make a fair observation...
Yes…a trader could go to a shorter time frame to see how price action is behaving in that "faster" time frame and take that as an “early warning”, if you will.
Keep in mind, however, that using the shorter time frame, the greater the potential for a "false entry" will be. With longer time frames a trader will take fewer trades but their success ratio will be higher. With shorter time frames they will take a greater number of trades but the success ratio will drop.
I would not say that “most” of the profit potential is gone by the time the third bar closes, but rather a portion of it is gone. But that portion that is gone, that movement, can play into the confirmation of the greater overall move.
There is an old trading adage that I observe...”I would rather be late and correct than early and wrong”.