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CounterTrend Trading

  • Poll

  • Which type of trading is more successful?
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  • #1
  • First Post: Oct 14, 2006 2:34pm Oct 14, 2006 2:34pm
Who here thinks counter-trend trading is more likely to succeed and why?

Kal
  • #2
  • Oct 14, 2006 3:25pm Oct 14, 2006 3:25pm
Quoting RizkInvestments
Who here thinks counter-trend trading is more likely to succeed and why?

Kal
IWWW, counter trend trading is probably the most dangerous way to trade, you can't trade like that, you may swing trade when all indicators show a reversal, otherwise just follow it because it's your friend, or counter trade it at your own risk and peril
Trading is a long and a short story.
  • #3
  • Oct 14, 2006 4:59pm Oct 14, 2006 4:59pm
He who pick bottom get stinky finger.
  • #4
  • Oct 14, 2006 5:40pm Oct 14, 2006 5:40pm
I think that counter trend trading must be approaced with great care & only at trend extremes...It is very profitable, but very dangerous, because you need to spot the exact time which the trend exhausts itself at the extreme...It takes courage to be a contrarian...

I also believe that counter trend trading is actually trend trading also...You are betting that the trend is exhausted & is going to reverse or most probably will not go higher or lower anymore...After all, you are still a trend trader...


Thanks,

Nader
  • #5
  • Oct 14, 2006 5:51pm Oct 14, 2006 5:51pm
This is an interesting topic. In my 18ish months of study i've found that EA's have a good success rate (at least the dozen or so i've been testing) at trading contra to the trend, whereas in my life trading, going with the trend is more profitable.

: ) Thom
  • #6
  • Edited Oct 15, 2006 1:44am Oct 14, 2006 6:34pm | Edited Oct 15, 2006 1:44am
My favorite way to trade is fading price moves on a 5 min. chart. Sometimes I use 1 min charts too, depends on how fast the market is moving. I like to scalp because I get to make a lot of trades which is fun. Plus I don't have to sit around for hours on end waiting for the right setup. I also have a high % of winners. The only problem is my losers take a big chunk of my profits. I don't think this is the best way to trade, just the most enjoyable for me.
How you act is more important than how you feel.
  • #7
  • Oct 15, 2006 11:58am Oct 15, 2006 11:58am
I was hoping to get more responses to the "and why?" part of my question

Here is what I think:

I think if you ask 10 different people WHY they think the trend is up or down you'll get 10 different answers.

For example - what is the current trend for the EUR/USD? Doesn't it really depend on the context / timeframe? I mean if you look at a monthly chart you'll say the euro is bullish. If you look at a weekly chart it can be argued both ways. If you look at a daily chart most will probably say bearish.

Another thing it depends on (and I think some of you touched upon this) is whether you are scalping, swing trading or longterm trading. If you are scalping then looking at a monthly chart is probably useless.

So those who answered going with the trend is the "safer method" how is it that you go about determining what the current trend is?

Kal
  • #8
  • Oct 15, 2006 12:53pm Oct 15, 2006 12:53pm
It depends on the time-frame you like to trade. I know people who hold positions for 2+ years...they don't care what an hour chart looks like. I just heard of a guy last night who's been in a position w/ the swissy since 1974!!! (don't know if that's true or not....urban legend?).

Having said that, consider this: the hr. chart is my main chart. I feel I can pick the trend in this chart pretty well. So, if I thought a currency pair was bullish on an hr. chart, I would not drill-down to a 5 minute chart looking for a short - I just wouldn't do it.
  • #9
  • Oct 15, 2006 2:08pm Oct 15, 2006 2:08pm
Quoting RizkInvestments
I was hoping to get more responses to the "and why?" part of my question

Here is what I think:

I think if you ask 10 different people WHY they think the trend is up or down you'll get 10 different answers.

For example - what is the current trend for the EUR/USD? Doesn't it really depend on the context / timeframe? I mean if you look at a monthly chart you'll say the euro is bullish. If you look at a weekly chart it can be argued both ways. If you look at a daily chart most will probably say bearish.

Another thing it depends on (and I think some of you touched upon this) is whether you are scalping, swing trading or longterm trading. If you are scalping then looking at a monthly chart is probably useless.

So those who answered going with the trend is the "safer method" how is it that you go about determining what the current trend is?

Kal
These are two guys (amongst many) whose judgement I respect. Check out posts #16 & #21 in this thread http://www.forexfactory.com/forexfor...ead.php?t=8808
The thought is that a chart's trend should stand on its own.
Enjoy
  • #10
  • Oct 16, 2006 12:23pm Oct 16, 2006 12:23pm
Quoting RizkInvestments
I was hoping to get more responses to the "and why?" part of my question

Here is what I think:

I think if you ask 10 different people WHY they think the trend is up or down you'll get 10 different answers.

For example - what is the current trend for the EUR/USD? Doesn't it really depend on the context / timeframe? I mean if you look at a monthly chart you'll say the euro is bullish. If you look at a weekly chart it can be argued both ways. If you look at a daily chart most will probably say bearish.

Another thing it depends on (and I think some of you touched upon this) is whether you are scalping, swing trading or longterm trading. If you are scalping then looking at a monthly chart is probably useless.

So those who answered going with the trend is the "safer method" how is it that you go about determining what the current trend is?

Kal
I am one of the people who says that trend trading is the "safer method" and personally I am short the Euro vs the USD & long the USD vs the CAD...

In my opinion, the Euro trend is down & I am short...This of course depends on the timeframe as you said...In my analysis, all time frames are showing that the Euro is in a downtrend, except for the weekly chart...And since my position is not a more than 1 month position, I don't care about what the weekly chart is saying...


Thanks,

Nader
  • #11
  • Oct 16, 2006 1:34pm Oct 16, 2006 1:34pm
If you are trying to pick the exact spot where a trend will reverse on whatever time interval chart and trading it, thank you for your donation to the market. If you are using a 1 hour chart and trade with the trend in a position that is contratrend to the daily chart, that's still trend trading.....

i think.
happy trading
  • #12
  • Oct 16, 2006 4:59pm Oct 16, 2006 4:59pm
Quoting squat1962
If you are trying to pick the exact spot where a trend will reverse on whatever time interval chart and trading it, thank you for your donation to the market. If you are using a 1 hour chart and trade with the trend in a position that is contratrend to the daily chart, that's still trend trading.....

i think.
happy trading
I'm not at a point where I can predict the exact reversal times but I can pinpoint which "day" the reversals will occur usually a week or two in advance. However, I've met several people in my life who get predict the reversal within 15 minutes of it happening Sounds mystical but I've seen it happen too many times for it to be coincidence.

Best,
Kal
  • #13
  • Oct 16, 2006 5:01pm Oct 16, 2006 5:01pm
I am a trend trader, however, I make small enough trades that I can average down or average up my position depending on the trend strength and direction. This way, if I am with the trend then I can pile on the trades as the trend continues, yet if judged poorly initially I can average my position down or up so I still come out on top.

Counter-trend trading as a rule is like saying you can swim faster than me because you swim upstream whereas I am floating downstream. Which would you rather be doing?
  • #14
  • Oct 16, 2006 5:02pm Oct 16, 2006 5:02pm
Quoting RizkInvestments
I'm not at a point where I can predict the exact reversal times but I can pinpoint which "day" the reversals will occur usually a week or two in advance. However, I've met several people in my life who get predict the reversal within 15 minutes of it happening Sounds mystical but I've seen it happen too many times for it to be coincidence.

Best,
Kal
Very intersting! Why don't you throw out a prediction now?
  • #15
  • Oct 16, 2006 5:24pm Oct 16, 2006 5:24pm
Wait, didn't Nastradamus predict a couple trend reversals? Damn, I need to get my old scrolls out...
  • #16
  • Oct 17, 2006 9:17am Oct 17, 2006 9:17am
Quoting philmcgrew
Very intersting! Why don't you throw out a prediction now?
The last reversal was a couple of days before NFP. On NFP day I entered short EURUSD at 2695 with 40 pip stop. As soon as I calculate the next reversal day I'll try to remember to post it.

Kal
  • #17
  • Oct 17, 2006 9:33am Oct 17, 2006 9:33am
LOL, I always trade against the masses. In fact, using forums such as this one is a good way to get a feel for the masses and what they are thinking and doing the opposite.

While most of you are trying to find "trend," traders like myself are creating them.
  • #18
  • Oct 17, 2006 9:53am Oct 17, 2006 9:53am
Quoting RogueTrader
LOL, I always trade against the masses. In fact, using forums such as this one is a good way to get a feel for the masses and what they are thinking and doing the opposite.

While most of you are trying to find "trend," traders like myself are creating them.
The downside of being better than everyone else is that people tend to assume you're pretentious.
  • #19
  • Oct 17, 2006 10:46am Oct 17, 2006 10:46am
Philmcgrew,

Pretenous is traders on this forum thinking they know everything about how these markets work when they have only been trading for 3 months and have 3 grand in their trading account.

smjones,

And just how much does it take to move a market or create a trend? Since you obviously have profound knowledge of such, enlighten us all.
  • #20
  • Oct 17, 2006 11:05am Oct 17, 2006 11:05am
This is awesome RizkInvestments, this is what I am aiming for too, I still have a looooong way to go. I'm studying down this path since about 3 months ago and I've never looked back.
Although maybe the correct description of this style is not necessary counter-trend but to pinpoint a reversal, either trend or counter-trend.


Quoting RizkInvestments
I'm not at a point where I can predict the exact reversal times but I can pinpoint which "day" the reversals will occur usually a week or two in advance. However, I've met several people in my life who get predict the reversal within 15 minutes of it happening Sounds mystical but I've seen it happen too many times for it to be coincidence.

Best,
Kal
-soso
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