could it be that a counter trade in your time frame is a trend trade for someone else in a shorter time frame ....
personaly, I might look to trade against the trend, looking for rejection of known levels that could worth the risk/reward .... If the trade don't work, exit and take the loss even faster than trend trades.....
The following user says Thank You to AkLio for this post:
Good question , its one of those that really has no answer . I think the majority of traders that have been at it for a while will agree that trying to trade with the trend provides a higher probability trade and I agree with them . Problem is that a trend is only clearly visible in hindsight and denying this will only lengthen the learning curve . Hindsight because a credible trendline is always easy to draw on a static chart and when you draw in a trendline on a live flowing chart all you need is for that trendline to be violated then respected again a few times to lose faith in that trendline or any particular direction .
So , its better to stay aware of price making highs and lows and staying aware of these levels creating a support or resistance level and using this info to stay on the right side .
To answer your question , in a way , I can give you a good reason not trade countertrend . when you are focussed on price while its flowing live and you are considering both continuation and countertrend signals odds are youll be leaning towards reversals and not continuations . Could be because reversal signals demand more focus , continuations are harder to detect or its an ego boost to pick a turn , I dont know . Mike will agree that deciding in advance on either looking for continuations or reversals ( countertrend ) is prudent practice and then let those trades come to you and not chasing one or the other .
Thk you to both Eric and AkiLio for valuable comments. I do like reversals, but hard to be right most of the time. yeh, I think we all have that ego to take the turn as most of the days, it does swing and reverses except very few days where trend is very strong in one direction all day.
On Tuesday my webinar is going to talk about trends, and how to identify them using multiple time frames. You'll at least get my opinion of what a trend is, and how to trade it, if you attend the webinar.
Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.
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Do a search for the thread on the Volume Ladder and take a look at the webinar in the thread. It shows a great example of counter trend trading, but it is very specific to the ES with market profile and retail trader physcology (eg your looking to trap people who are long on a break out of the value area, and take out their stops on the short side). I remember duing my first year trading, often getting stopped many times trying to buy ES breakouts from VAH, only to finally give up after been beaten up and to see the next break out take off .... very frustrating. Infact I think I lost more money trying to buy break outs than anything. But then when you trade the ES, your up against the best professional traders in the world ........
Otherwise some intruments seem to be very springy when the price pushes into the bollinger band and might offer oportunities to grab a quick counter trend trade. But I'de back test first to see what works as different instruments behave differently and they also behave different on the long and short side. As always even in the best case often your going to loose on the trade and get stopped out, but as long as in the long term your making money, thats what matters.
Some people try to trade counter trends on MA crosses also, since they are so laggy ... it's a matter of testing the market to see what works.
Personal I look for intruments that trend well and jump on the trend as soon as it's obvious. I have got counter trend strats that work, but not as well as trending strats.