Discussion in 'Psychology' started by hairdresser, May 19, 2009.
What is it that people always want to trade counter trend on ET?
I thought you of all people know that counter trend works, just like trend following, assuming a person has the knowledge
I covered a while back, have fun fighting the tape today guys.
It's not that they want to trade counter-trend...
It's that they have reason (although incorrect) that the trend has ended or is taking a pause (pullback).
Then if the trade fails and trend resumes...
That's when it is observed that the trader was counter-trend trading.
However, if someone KNOWS they are counter-trend trading prior to entry...
They should use tight stop/loss protection, reduced position size along with smaller profit target due to the fact that they are most likely trying to catch a retracement prior to the trend resuming.
My point is that there are two types of counter-trend traders...
* Those that know the trend will eventually resume...they know this prior to entry and are only trying to catch a profitable retracement.
* Those that thought the trend has concluded to only find out in hindsight the trend has not concluded.
Counter trend is where price is trying to jam it's way through some sort of congestion or into an area where lots of people don't want it to go.... hairdresser should be able to relate.....
even if following the trend, i reckon unless one is looking to get in right at the breakout or breakdown point, then they will almost always be countertrending the smaller time frame to get into their positions.
like i will buy the pullbacks on uptrends and sell the rallys on downtrends. if i have determined an uptrend by the 5 minute charts then i will look to buy at some point that will most usually FEEL like i am fighting the trend and will almost always look like an authentic trend reversal on the 1 minute chart. as this is a psyche forum, the "feeling" is usually engendered by thoughts like "clearly it is moving in this direction so why the f..k are you playing the opposite?!" or "surely this is a trend reversal and not just a pullback" or "however much you may have backtested, this is one of those days that it just doesn't follow those ever ambiguous rules or it's the beginning of the end of this vehicle's behavioral patterns" etc. etc. etc.
why fight the trend? like NihabaAshi had said, i don't think anyone would intentionally do it and it all depends upon the time frame used. like if you are more into holding long term, it seems that the monthly or even weekly ES or YM charts are still bearish and they may be taking a breather before resuming their downward plunge. for me, i wouldn't put too much money in either direction long term thus i am one of those chickeny types that if not fairly market neutral, am out of my positions by the end of the day.
They probably see another reverse trend in a smaller time-frame.
The only tape I fight is when I buy an overpackaged product.
I only trade counter trend intraday and it works very well. Have years of live stats that backup fact it works very well. Key on countertrend is to use tight stops. A ct trade tends to work pretty fast if it is going to work. You dont want to hanging around when it goes back to trend with a big stop because will probably take you out. You can use much wider stops when trading the trend.
Also can work well to trade the trends. Lots of ways to make money in the market. Just have to find what works and stay with it until it does not work.
if you think about it, everyone is really a counter trend trader when you look at the large picture. A day trader playing the bull market for his time frame may be trading against the trend on the 1hr, or daily.
A trend is just a retracement within a much larger trend.
heres a picture to show my point
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