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Never Go Against the Trend?

  • Post #1
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  • First Post: Jan 14, 2018 8:16pm Jan 14, 2018 8:16pm
Does this mean that the probability is that I will lose money going against the trend? If that is true is my expected value is positive if I go with the trend whatever trade I make? Do you get my point? If my expected value is negative if I go against the trend, it is positive if I go with it!
OR
It does not matter if you go with the trend. There are no trends. All trades are 50/50 chance of profit!
Define the trend, you must!
Learn, a forex trader must, unlearn and relearn he will.
  • Post #3
  • Quote
  • Edited 6:55am Jan 15, 2018 4:30am | Edited 6:55am
ofcourse it is possible to go against the trend and make a profit but the probability is lower. you CAN lose, doesnt mean you will.
why go WITH the trend? because the probability of making profit is higher. in case you are newbie, you have to know how to read the charts and how to find the trend.

you can aswell lose money even if you go with the trend. again, it's all about probability. trade ONLY if there are high probability signals in direction WITH the trend, avoid everything else. that's a key.

there are small trends and big trends in longer and shorter timeframes. to find the trend look at least on daily chart and above. google "what is trend", "how to find trend" etc.

you need to find a tradingstyle you are comfortable with. one way of trading is find the trend on D1, switch to H4 chart and wait for a pullback AND a continuation signal pointing to trend direction and then enter in direction of trend. How long to hold a position? I dont know. Experience will tell you. few hours, few days, who knows. this might sound easy and it's not always easy. i advice you to trade on demo account until you understand how it works. learn the basics of forex, risk management etc. it's important!
Quoting waverhythm
ofcourse it is possible to go against the trend and make a profit but the probability is lower. you CAN lose, doesnt mean you will. why go WITH the trend? because the probability of making profit is higher. in case you are newbie, you have to know how to read the charts and how to find the trend. you can aswell lose money even if you go with the trend. again, it's all about probability. trade ONLY if there are high probability signals in direction WITH the trend, avoid everything else. that's a key. there are small trends and big trends in longer...
How do you measure probability? Wouldn't it depend on your system? Also, the market breaks out at the start of a 1m candle not 47 seconds into it.Atleast that is what I noticed.
The Earth is flat!
  • Post #5
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  • Edited 7:06pm Jan 15, 2018 1:39pm | Edited 7:06pm
Quoting Torontoman
Does this mean that the probability is that I will lose money going against the trend? If that is true is my expected value is positive if I go with the trend whatever trade I make? Do you get my point? If my expected value is negative if I go against the trend, it is positive if I go with it! OR It does not matter if you go with the trend. There are no trends. All trades are 50/50 chance of profit!
This is one of those wired dichotomous situations where BOTH things are true.

Let's take a look at a coin flip. The chance of flipping "heads" is 50%, and the chance of flipping "tails" is 50%.

Now suppose we flipped the coin 10 times and got 10 "tails".

What is the probability of getting "tails" on the next flip? That's right, 50%. This never changes. But, the are such things as MOMENTUM, STREAKS, and TRENDS. There is greater edge in choosing "tails" as the outcome of the next flip because of the observable Momentum, Streak, or Trend. There is less edge in choosing "heads" as the outcome simply because "heads is due".
Yes, the law of large numbers tells us that if you flip this coin enough times, the outcome will tend towards an even amount of "heads"" and "tails" (i.e. 50/50). However, during any snapshot of time, the outcomes can vary drastically from the absolute probabilities (i.e.50/50).

I usually hate gambling references with respect to trading, but here is a telling one. Some years back, Vegas installed digital displays on the roulette tables. These displays would show the last numbers for x amount of spins. If the space the ball landed on was red, the number displayed was red. If the space the ball landed on was black, the number was black on the display.

These new displays resulted in an immediate and large increase in the revenue roulette brought in for the casinos. Why? Because the "gambler or novice" would see 3 red numbers in a row on the display, and immediate place a bet on black. After all, leaving aside 0 and 00, the probabilities of red and black are 50/50. So if we have had 3 reds in a row, black must be due. Vegas isn't built on winners, so what do you think most of these people did? That's right lose.

On the other hand, what did the "expert or professional gambler" tend to do? He bet on red. Sure, the absolute probabilities remained 50/50 (leaving out 0 and 00). But the "expert or professional gambler" recognized an observable trend, or streak, and tended to bet with that.

When we talk about the Forex market, we are talking about the market with the highest propensity to trend. So while the probability of any one trade is 50/50 (leaving aside break even and commission costs), there is a greater edge in trading with what the market naturally wants to do-trend.
Wyckoff VSA: (1) Supply vs Demand (2) Effort vs Result (3) Cause vs Effect
Quoting Torontoman
Does this mean that the probability is that I will lose money going against the trend? If that is true is my expected value is positive if I go with the trend whatever trade I make? Do you get my point? If my expected value is negative if I go against the trend, it is positive if I go with it! OR It does not matter if you go with the trend. There are no trends. All trades are 50/50 chance of profit!
Each trade, whether against or with the trend, has to be measured on its own terms, so it is pointless to talk of negative or positive trades, because if there is a negative expectation, you simply don't take the trade. All trades have to have a positive expectation, otherwise why take them? The trend is your friend, but we all know that trading the markets is nowhere near as simple as merely jumping in once a trend has been established, though, it is very important to trade with momentum on your side, which is not the same as ' trend '. Trading with momentum is key, as is learning to recognize when momentum has shifted from one side to another.
Quoting Tfh
{quote} How do you measure probability? Wouldn't it depend on your system? Also, the market breaks out at the start of a 1m candle not 47 seconds into it.Atleast that is what I noticed.
I measure probability by looking at what has happened in the past on the chart. as they say "if something has happened several times in the past, it most probably will happen again in the future".
And some people who seem to be profitable says that if you go with the trend you will most probably make profits because the trend usually doesnt stop right away, but if you enter against the trend you cant always know when it will reverse just to continue the trend and that can lead to loss. this way i see there are more chances to profit by going with the trend.
hope my explanation was clear enough.

but sure it depends on the tradingsystem you use and timeframe. i was thinking about a trend following system (in this case the short term trend).
Quoting Torontoman
Does this mean that the probability is that I will lose money going against the trend? If that is true is my expected value is positive if I go with the trend whatever trade I make? Do you get my point? If my expected value is negative if I go against the trend, it is positive if I go with it! OR It does not matter if you go with the trend. There are no trends. All trades are 50/50 chance of profit!
Yes, you can go against the trend if you are enough skilled. In a trendy market, price makes some retracement. If you can find them you will make money. But without proper risk management policy going against trend means suicide. And go with trend unless it bends. It means you can follow the trend untill price makes reversal. Now whether it is reversal or retracement that's the question. Here is the twist. So the conclusion is you have to skilled enough to survive here.
On who,s time horizon should we determine trend ?
Quoting diceman555
On who,s time horizon should we determine trend ?
The trend is relative to your strategy so if according to your strategy it's a trend, don't go against it.
Here's Tom with the weather.
Quoting HiddenGap
{quote} This is one of those wired dichotomous situations where BOTH things are true. Let's take a look at a coin flip. The chance of flipping "heads" is 50%, and the chance of flipping "tails" is 50%. Now suppose we flipped the coin 10 times and got 10 "tails". What is the probability of getting "tails" on the next flip? That's right, 50%. This never changes. But, the are such things as MOMENTUM, STREAKS, and TRENDS. There is greater edge in choosing "tails" as the outcome of the next flip because of the observable Momentum, Streak, or Trend. There...

The probability of a winning or losing trade is not 50/50 merely because there are 2 possible outcomes.

Trends in the financial markets do not form and persist because of a human weakness in calculating probability of consecutive outcomes from similar events.
Quoting tomorton
{quote} The probability of a winning or losing trade is not 50/50 merely because there are 2 possible outcomes. Trends in the financial markets do not form and persist because of a human weakness in calculating probability of consecutive outcomes from similar events.
This has been discussed, sometimes heatedly, at Big Mike's forum. Check it out if you wish.

The reality is there are only two options: win or lose, and they each have a an equal weight. In other words, there is a 50% chance either will occur.

That is not to say, that trading can't be made to "be better than a coin flip". You can do all the right research, use the right indicators, know price action like you know the back of your hand, and create a method or system that is 70% winners to 30% losers. But any individual trade still only has a 50% chance of winning and a 50% chance of losing(again, for the sake of simplicity and simpletons like me, I am leaving out break even trades or trades where the only loss is commission costs).

It is possible to be "in the zone". Where every trade you make results in profit. So while you might have a greater winning edge at the moment, the absolute probability of the out come on the next trade remains: Win 50% Lose 50%.

As far as trends go, this has nothing to do with the creation of trends; rather the exploitation of them. Which is why great traders like the late Tom Williams said, "trade like the trend will never end". But in doing, you still haven't changed the underlying reality that the trade is either a winner or a loser.
Wyckoff VSA: (1) Supply vs Demand (2) Effort vs Result (3) Cause vs Effect
Interesting Post!! Thank you!!

quote=HiddenGap;10674514]{quote} This has been discussed, sometimes heatedly, at Big Mike's forum. Check it out if you wish. The reality is there are only two options: win or lose, and they each have a an equal weight. In other words, there is a 50% chance either will occur. That is not to say, that trading can't be made to "be better than a coin flip". You can do all the right research, use the right indicators, know price action like you know the back of your hand, and create a method or system that is 70% winners to 30% losers. But any individual trade still only has a 50% chance of winning and a 50% chance of losing(again, for the sake of simplicity and simpletons like me, I am leaving out break even trades or trades where the only loss is commission costs). It is possible to be "in the zone". Where every trade you make results in profit. So while you might have a greater winning edge at the moment, the absolute probability of the out come on the next trade remains: Win 50% Lose 50%. As far as trends go, this has nothing to do with the creation of trends; rather the exploitation of them. Which is why great traders like the late Tom Williams said, "trade like the trend will never end". But in doing, you still haven't changed the underlying reality that the trade is either a winner or a loser.[/quote]
Quoting Torontoman
Does this mean that the probability is that I will lose money going against the trend? If that is true is my expected value is positive if I go with the trend whatever trade I make? Do you get my point? If my expected value is negative if I go against the trend, it is positive if I go with it! OR It does not matter if you go with the trend. There are no trends. All trades are 50/50 chance of profit!
i don't agree with this, some of my best trades have been counter trend plays.
Quoting tomorton
{quote} The probability of a winning or losing trade is not 50/50 merely because there are 2 possible outcomes. Trends in the financial markets do not form and persist because of a human weakness in calculating probability of consecutive outcomes from similar events.
The reality is the market can do 1 of 3 things. Thus your option will result in a 33% chance of winning. Probabilities are always based on tangible things and looking at the definition of trend doesn't contain anything forex can give us.
The Earth is flat!
Quoting OHLC
{quote} The trend is relative to your strategy so if according to your strategy it's a trend, don't go against it.
Then I would suggest it's subjective to each individual's perspective and by definition can't possibly have an edge .....

If the o.p's opening statement is correct as many seem to believe it to be true then I think we must change the topic to try and define what the trend actually is because unfortunately the numbers suggest that either there is no advantage in trading the trend or none of us know what the trend is.
Quoting diceman555
{quote} Then I would suggest it's subjective to each individual's perspective and by definition can't possibly have an edge ..... If the o.p's opening statement is correct as many seem to believe it to be true then I think we must change the topic to try and define what the trend actually is because unfortunately the numbers suggest that either there is no advantage in trading the trend or none of us know what the trend is.
This is exactly my point!!
Quoting diceman555
{quote} Then I would suggest it's subjective to each individual's perspective and by definition can't possibly have an edge ..... If the o.p's opening statement is correct as many seem to believe it to be true then I think we must change the topic to try and define what the trend actually is because unfortunately the numbers suggest that either there is no advantage in trading the trend or none of us know what the trend is.
I wouldn't bother trying to well-define anything. Just work on your strategy and figure out what works best for you. For you, it maybe counter-trend, for others it may be trend-following. For me, a trend is determined on a daily basis by looking at the daily candle or recent daily candle patterns. There will never be one standard definition of what a trend is in such a way that most everyone will accept so why bother with definitions. Just concentrate on figuring out how not to lose money. Then after that, concentrate on figuring out how to make a little bit of money. Then rinse and repeat and most important of all, don't get greedy
Here's Tom with the weather.
Thanks for for your comments. I’m still in the study stage. I’m trading with real money, but very small amounts. I want a positive expected value of my trades. For example, if I want to make 30 pips, I may want to look at the 15 minute chart. RR 1:1. People say that if it’s sloping down, don’t buy. Does that mean selling will profit me more than 50.1% of the time? Do you see my point?

Quoting OHLC
{quote} I wouldn't bother trying to well-define anything. Just work on your strategy and figure out what works best for you. For you, it maybe counter-trend, for others it may be trend-following. For me, a trend is determined on a daily basis by looking at the daily candle or recent daily candle patterns. There will never be one standard definition of what a trend is in such a way that most everyone will accept so why bother with definitions. Just concentrate on figuring out how not to lose money. Then after that, concentrate on figuring out how...
Quoting HiddenGap
{quote} This has been discussed, sometimes heatedly, at Big Mike's forum. Check it out if you wish. The reality is there are only two options: win or lose, and they each have a an equal weight. In other words, there is a 50% chance either will occur. That is not to say, that trading can't be made to "be better than a coin flip". You can do all the right research, use the right indicators, know price action like you know the back of your hand, and create a method or system that is 70% winners to 30% losers. But any individual trade still only has...

There is no logic in this. The possibility of two opposing outcomes does not make both equally probable. If it did, every airplane that took off would have a 50% probability of crashing rather than landing.

However, maybe your trades have only a 50% probability of a profitable outcome. You know, there's plenty of traders here and on other forums who could help you with this.
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