trend trading requires big balls how big? so big you qualify as a handicapped person why? because 50-99% retracements are very common and not many people can watch a 2000 gain shrink to a 200 gain or before it turns into a 4000 gain countertrend trading is child's play - it is conventional wisdom - buy low, sell high
the method that you trade you must choose youself. The question about what sistem are most profitable is not correct. I i use the simple trandfollowing sistem and i can use huge leverage.He based on indicators. adout contrtrend. i think this method could give more profit( ). But in this case you must reserch the chart patterns(because is more comfitable than see on a RSI or STOCH) or option strategy that more complicated.
both have characteristics that can make it hard to trade. trend following - could have a very long period where no profits are made, which is often a slight drawdown as well. you must be very disciplined and mentally tough i think. even turtle traders recognise that their accounts may be flat for a couple of years before the market starts trending again. counter trend - can experience very high intra day drawdown. from what ive heard, EOD traders make better returns with counter trend systems. as they use alot of leverage. trend followers can too, however interest charges will kill profits- and short term trend following systems are alot harder to construct imo, because trends take time to unfold. just what i think anyway. everyone thinks differently.
no, it requires brains. i have had this discussion on numerous occasions with my trading partners. out of the 9 of us, 3 are strictly day traders, 4 are swing traders, 1 is an EOD trend follower, and then there is me. and we are all successful. and the one common thread is me. i am all of the above. and that is where the brains come in. i normally scalp the markets. but on occasion those turn into a swing trade. and sometimes a trend trade. look at it like, swimming at the beach. you are doing your thing body surfing the waves. some take you a few feet, some all the way to the beach and everything in between. and on that rare occasion, you stepped where you shouldn't have and get caught in a rip tide. don't fight it. ride it. in other words don't hold a position into a 50% retracement, take your profit or a quick small loss, the other side of the trade and keep riding.
It's all about risk. If price fluctuations make me feel uncomfortable then I reduce position size. Some securities show large price increases that continue many years. I think it helps me to look at 10 year price charts instead of 1 year charts. A longer term perspective helps me focus on my objectives. I remember buying 1 share of stock a few years ago. As I recall it was an expensive stock and price very volatile. Yes I recall making money on that deal. 1 share. Easy for me to sleep at night. Maybe I made 20 % return on investment in about a year. Low long term capital gains taxes. Actually I sold too soon. Stock price is much greater now.