Thread: CounterTrend Trading

Originally Posted by ;

However, I believe U can not against the news when u try to make an entrance right??

The Majority of the times, yes.

The transfer we have seen yesterday in EUR/USD is an ideal illuion of why some people trade counter-trend.

As most would assert, the trend was clearly down for the last week or so. Many counter-trend traders were evaporating these movements (ie scaling their orders and buying at the extremes) while most trend traders were seeking to short any rallies. I am ready to bet that MANY trend traders shorted premature and thus originally lost during move.

Now the question becomes - is the trend for EUR/USD up or down

There you have it.
I wish you the very best of trading,
Kal

One might also argue that we are in a rangebound market (EURUSD) since mid-May and although range lows have been examined, they have not been broken. If that's the case, there is not a tendency so there may be no counter tendency.

We have not seen ongoing volatilities this reduced since October 2002.

This is why people are getting off with doubling down, adding to their own position every -10 pips, and not utilizing stoplosses. As the market moves, and it's going to most of those who got careless will be with us.

Phil, I know you've read Fooled By Randomness, by Teleb, I think we just have not seen the Black Swan fly for a while. Those who forget history are doomed to repeat it.

I agree with you on this. Scott

Originally Posted by ;

One might also argue that we're in a rangebound market (EURUSD) because mid-May and although range lows have been tested, they have not been broken. If that's the case, there is not a trend so there may be no counter trend.

We haven't seen ongoing volatilities this reduced since October 2002.

This is the reason why people are getting off with doubling down, adding to their place every -10 pips, and not using stoplosses. Whenever the market goes, and it will, most of those who obtained careless will no more be with us.

In order to plagiarize fashion this manner, wouldn't you need to define fad specifically in time terms? One man's trend could be another man's momentum.

Originally Posted by ;

One might also argue that we're in a rangebound market (EURUSD) because mid-May and although range lows are tested, they have yet to be broken. If that's the case, there isn't a trend so there may be no counter trend.

We haven't seen ongoing volatilities this reduced since October 2002.

This is why people are getting off with doubling down, adding to their own place every -10 pips, rather than using stoplosses. Whenever the market moves, and it's going to most of those who got careless will no longer be with us.

Again, it is all boils down to exactly what timeframe you're talking about.

Everything you refer to happens a couple of times a year for most. Check the message boards and you can normally tell when this has happened. Usually - as you mentioned - it occurs after people get overly comfy adding to losing positions with no stoploss.

Good fortune,
Kal

Originally Posted by ;

.. .Those who forget history are doomed to repeat it.

Hey, nice quote!

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You can counter trade (1 min chart) if Everything you are looking for is a few pips

Originally Posted by ;

What is counter trend trading actually???

It entails trading contrary to the'longer term' tendency (what you define this to be). This may result in faster profits since the counter-trend may be more volatile than the more evident tendency (for a range of technical and fundamental reasons, i.e prejudice where one curency is profoundly short/long (leaving it drowsy ), panic selling, automatic orders being filled, choices etc). However, the downside is that if the favorable move does not happen, you might be trapped, and there is a smaller chance that it is possible to rely on the longer term tendency to bail you out later on.