Trend following and Fading the Market

Discussion in 'Trading' started by Big_M_Surfer, Feb 18, 2004.

  1. Hi everyone this is my first post, even if I'm watching posts on ET from a few months.

    I'm a beginner I started studing the markets and basically all what concern the trading endeavor almost 1 year and a half ago and I started real trading from about 8 months.

    I'm daytrading the E-Minidow 5$, using the 1-min chart for my entryes and looking also to the tick chart and 5min chart for shorter and longer perspective.

    I basially use a breakout metodology who consist of Ross Techniques filtered with other very simples rules.

    I'm still not taking $$ out from the market with consistency but I'm still alive and that's something for a beginner like me, who is "growing" in the trading endeavor every day a little bit.

    In these last days when the market was really very choppy and all Bk and momentum strategies are not working at all and I'm mostly out of the market, I'm thinking about studing also a contrarian metodology to use in these kind of markets.

    For the most part traders are trend followers OR trend faders but I think it is important if someone want to do this job professionally to be both according to the circumstances.

    I would like to have your opinions especially from experienced traders, and also if you can give me some suggestion about building a contrarian metodology.

    Thank you to everyone.

  2. dbphoenix


    Generally speaking, if you're a beginner, it's best to stick with one strategy until you know it inside and out and can develop a trading "persona" that doesn't get tossed around with every little wavelet.

    On the other hand, if the strategy you've chosen doesn't generate enough trades for you to learn anything, then you may as well not trade at all. Therefore, looking at strategies that will enable you to participate when the breakout strategy isn't working would not be unreasonable.

    Not sure what you mean by "contrarian", tho. Are you talking about playing reversals? (I assume you're not talking about trading counter-trend)
  3. Thanks dbphoenix,
    yes my main goal is to deepen my trading strategy and that's actually what I'm doing and will do in the next future; but exactly in this process of knowing and testing it on the reality of the market I'm realizing that in some circumstances it's not working and better don't using it, well actually it's better to say in some market conditions it does't give any signal (because filters say that in those conditions don't take the signal).

    That's why I was thinking of studing another metodology for these situations.

    With "contrarian" I mean specifically the contrary of taking a bkout, meaning "fading the bkout traders" entering in the opposite direction of the bkout.

    Probably it' too much for a beginner as you say.... but observing the market in the last few days...

    Thank you
  4. dbphoenix


    Fading is a counter-trend trade, which many traders would not recommend for beginners. If you're a trend-trader, you probably already know about trading retracements. If you want to bone up on reversal strategies, do a Search using "divergence", "reversal", "pivot".
  5. Sometimes it is not a good idea to "move forward" if you are encountering a challenge.

    Another consideration is to check out the rationality of your thoughts.

    when you have put as much work into your exit strategy as your entrance strategy, then you can add stuff.

    The first thing to add is a capital protection strategy even before you do your exit development. What comes after a bad entry is a "wash" trade.

    To trade you need three pervasive elements: entry; hold and exit.

    You are trading on the wrong fractal. The reason I say this is what your refer to as "history". A winningest fractal is filled with hitory to always be there for you.
  6. what do you mean by fading the market?

    that's an over used term, and I never quite know what they mean?