Introduction to Countertrend System

eminitrader007 · Jul 1, 2006

Quote from Willleung:

Any pointers for Countertrend systems for swing trading?

Most of my books are on trend fellowing systems, would like to learn more on countertrend...

What's their basic theme?Â¡Â¡(certain persentage of reaction after lowest low value etc?)

How do estiablish comfirmation or filter on a countertrend system?

Any input welcome.

Cheers

Will
More...

Check this thread. I'm not sure if this system stil works or not but the examples were real-time.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=20761

laputa · Jul 5, 2006

Will Leung?

Is that you Lo Yam?

MGJ · Jul 5, 2006

Jack Schwager's very first book contains a section (within chapter 27) called COUNTER-TREND SYSTEMS. You might recognize Jack's name, he also wrote the popular series of Market Wizards books. The section includes the following wonderful passage: A critical distinction to keep in mind is that whereas a trend-following system is basically self-correcting, a counter-trend system implies unlimited losses. Therefore, it is essential to include some stop conditions in any counter-trend system.

Schwager discusses a number of counter-trend systems, including

Fading minimum move

Fading minimum move with confirmation delay

Oscillators

Cycles

Contrary opinion

I enjoyed the book very much.

nononsense · Jul 5, 2006

Hi All,

Stop a moment and take a deep breath before rambling on. In order to trade "Countertrend, don't you have to KNOW the TREND?

Many poor souls at ET seem to have a serious problem with trend gazing. Simply look at the last 10 odd threads on the subject.

Shouldn't this countertrend thread point out that it can only be of use for those capable of finding the trend.

The Trend is your Friend;
The Countertrend is also your friend.

BillySimas · Jul 6, 2006

Quote from MGJ:

Have you looked at Trading in Choppy Markets: Breakthrough Techniques for Exploiting Nontrending Markets by Robert Barnes? It is selling for $6.45 (used) at Amazon dot com. I think it's a decent book and contains some good ideas. You'll have to install modern positionsizing yourself; the book was written in the bad old days when authors blithely ran constant-position-size tests. Still, I think it's a good value, if only as a source of ideas.
More...

Price went up to $32. Screw that.

prasxz · Jul 7, 2006

Hi Will,

Have you try for WMA Cross for Index (Nikkei,Kospi,Hangseng)
it's very simple system and profitable..my friend did....

Cheers,

Prasxz

hardyards · Jul 7, 2006

Quote from nononsense:

Hi All,

Stop a moment and take a deep breath before rambling on. In order to trade "Countertrend, don't you have to KNOW the TREND?

Many poor souls at ET seem to have a serious problem with trend gazing. Simply look at the last 10 odd threads on the subject.

Shouldn't this countertrend thread point out that it can only be of use for those capable of finding the trend.

The Trend is your Friend; The Countertrend is also your friend.

More...

You make a very good point nononsense.

Much is made of the word trend, but before a trader can throw such a word around with gay abandon he/she must first define a TF (time frame) in which the trend forms.

Now the fun begins.
Either you will become a BO boy (breakout) and your risk will lie spread across the range or you will become a fader and your risk will be reduced significantly, but your skill level will need to be proportionately higher.
I suspect that the author of this thread is enquiring about fading when refering to counter trend trading, simply because countering the trend without reference to a TF can only result in tears.