in other words , why trend following system always performs better than counter trend system? would anyone explain it ? thank you
from my experience i think its easier to see when we have reversed direction and possily started a new trend/direction. the signs are fairly obvious as opposed to trying to pick a top or bottom. once the new direction is confirmed then its possible to make better trades in this new direction, the direction of the trend. more often than not the new direction will be safer and more predictably traded than tops or bottoms.
Can you tell us what you use to signal a possible reversal? Trendline breaks, moving averages, divergence, candles?
because if it trends, then countertrend signals will have reduced amplitude. Why trade against the trend? There are thousands of instruments to trade.
That is actually a very good question. I get the feeling by reading these forums that most traders here at the moment are trading counter-trend strategies, at least in regard to nyse/naz stocks. That seems to be what the current market environment favors. By contrast, during the boom and bust of the 90's and shortly after, trend trading was in vogue. Stocks tended to make big moves in a single direction. It can still depend on the particular day as to which type is best, trend or counter-trend. When the dow ran up all day on Thursday, counter-trend traders did poorly.
I am no expert...I am gathering information myself. what helped me with Trend trading was reading The Way of the Turtle by Curtis Faith. It will explain who the "Turtles" were, who started the group, why it was started, and describe the simple, robust trend trading system they followed that produced incredible gains. I have my own understanding about trend trading. But read the book and make your own conclusions.
Your observation needs a little clarification via what I've notice here at ET and via the response over several different polls done at ET. Most counter-trend traders are day trading whereas in comparison most trend following traders are swing trading or position trading. Knowing that, I've also observed that the trend following traders that were day trading (not swing trading nor position trading) were doing poorly as the counter-trend day traders due to the fact the markets mainly discussed at ET on the intraday price action is range bound most of the time. Simply, comparing all trading styles, trend following traders that aren't day trading are outperforming everybody. However, trend following day traders seem to be in the same performance boat as the counter-trend day trader. Therefore, what your actually noticing is that swing traders or position traders are outperforming the day traders. Just my observation. Mark
=========== Robin; For starters, look at all the data QQQQ daily candles , weekly, monthly candles; thats why we say trend =friend. Good question,may want to study it enough so; soyou you know it in every fiber of your being. Money management =friend also