It really depends on timeframe, Long term counter-trend hedged and few rules bias doesn't change whereas day trading many rules and in trade short time bias must change quickly. When a market is 10% from highs or less, tough to think trend not your friend swing trading. But it all comes down to your Trading plan and amount of back testing that went into it.
Well that is what helps me spot areas of exhaustion. I have a hourly, 5min, and 1min up. On the long term we were below key support levels, but on st we were "overselling" which caused me to cover. It saved my butt and took in nice profits but If I reversed, it would have turned out to be a better trade. If I was bullish for example instead of bearish, I would have more conviction in going long and almost see it as a huge opportunity for my bullish bias. Where as when I'm bearish and I have a short, I see the selling is overdone in st, and can rally from here. However I never know how high a market can rally and always cover
It's a balancing act. There are successful pros who start every day with a bias (Linda Bradford Raschke). Yet one has to be receptive to signs of invalidation. One needs to see both sides at all times and estimate impartially. How that works out in practice depends on experience and know-how. Some avoid the issue by going purely mechanical. On the other hand the Lebowski character in the similarly titled movie attributes his mental nimbleness to a proper regime of psychotropics.
That does nothing to help him Counter trend = whipsaws, losses, and the occasional (but rare win). ----------------------------------------------------------------------------------- To be honest the million dollar question. There are tons of ways to define a trend: Trendlines, moving averages, fib retracements, government intervention, pumps. Then consider the way price reacts. But then you need to consider which time frame to trade as well. A rough example would be trading a weekly uptrend and then taking downtrend break trades on the daily time frame. Some people make it easy and buy near all-time highs. Some people make it hard and buy at 52-week lows.
The vast majority of traders who become consistently profitable via trading, do trend trading, which is why so many are "trend-trading happy", is what works for most. Counter trading is in a different league of difficulty but that does not mean it's not possible, it just requires a much higher understanding of market structure to be executed correctly which is why even profitable traders consider it not worth it. Hard to find a move more furious than a strong trend failing, but defining failure correctly is the key to it all. I have an arsenal of setups for trend trading, as well as counter, all positive expectancy and reasonable frequency. Took me perhaps 10 years to be able to claim that with one teacher and one teacher only, the market.
Its not a question of 'how'. Its a question of do or die. The ability is part of your personal make up or its not.
Another great example of this problem of mine is today's open. I was neutral and saw the H&S pattern on the futures from overnight, so I shorted at open, made decent profits and closed right at the low. I simply then just watched what the market wanted to do from there instead of reversing. Low and behold shoots up from right when I covered. Maybe it's not my bias since I was actually neutral coming into today, but my most recent trade at market open was short and took profits right at bottom in open.
Great article. Debit. Fits the majority of ET. Its super funny no one comments on the content. I guess its beyond their comprehension. happy to see this articulated. surf
Unlike the platitudes on this thread--- the reality is you need to have a bias and anticipate what the market will do. Trade what u think not what you see-- until you enter, then trade what u see. Because THE FUTURE IS UNWRITTEN. surf