Counter-trend with trend following

Long_or_Short · Jun 6, 2005

Hi,

I would like to know if any one here on elite-trader employed any strategies involving a counter-trend technique with trend following....also has the strategy evened out the equity curve. Also when counter trending do you use a fixed profit target based on a fixed percent at or a point system based on how many points(ie 15 ticks) moves in your direction. Any type of input would be helpful.

Thank you

MAESTRO · Jun 6, 2005

You can easily create and test such a system your self. Just use MA as your trend following technique and something like RSI as your counter trend entry/exit signal. You should use RSI on a shorter time frame though. You'll find everything you need to find.

Long_or_Short · Jun 6, 2005

Quote from MAESTRO:

You can easily create and test such a system your self. Just use MA as your trend following technique and something like RSI as your counter trend entry/exit signal. You should use RSI on a shorter time frame though. You'll find everything you need to find.

Thank you,

One question on the counter trending with the RSI what is you point of exit?

MAESTRO · Jun 6, 2005

Quote from Long_or_Short:

Thank you,

One question on the counter trending with the RSI what is you point of exit?

I use a reverse signal to exit. Example: If the MA is positive I go long when the RSI (on the shorter scale) is lower than 20% and I get out when the RSI is greater than 80%. But you can experiment with it.

Long_or_Short · Jun 6, 2005

Quote from MAESTRO:

I use a reverse signal to exit. Example: If the MA is positive I go long when the RSI (on the shorter scale) is lower than 20% and I get out when the RSI is greater than 80%. But you can experiment with it.

Thank you I'll look at it.

5yrtrader · Jun 6, 2005

Quote from MAESTRO:

You can easily create and test such a system your self. Just use MA as your trend following technique and something like RSI as your counter trend entry/exit signal. You should use RSI on a shorter time frame though. You'll find everything you need to find.

I have found that with overbought/sold indicators the trader is better off buying when it is overbought and selling when it is oversold.

maxpi · Jun 6, 2005

Quote from 5yrtrader:

I have found that with overbought/sold indicators the trader is better off buying when it is overbought and selling when it is oversold.

They are said to work better when the market in question is not trending. I don't know anymore, it is funny, I graduated from indicators. I never believed all these folks that did not use indicators but I have done it. I can get things done with a lot less CPU time for sure. I hope I can reincorporate them at some point, I sure studied them a lot and I miss them.

5yrtrader · Jun 6, 2005

How do you know if a market is trending or if it is about to trend?

EliteThink · Jun 6, 2005

Quote from MAESTRO:

You can easily create and test such a system your self. Just use MA as your trend following technique and something like RSI as your counter trend entry/exit signal. You should use RSI on a shorter time frame though. You'll find everything you need to find.

You can get a ma to be profitable for trend following?

A 2 by 7 on a daily with stops works for congestion. Wide parameters of profitability compared to trend following.

Long_or_Short · Jun 6, 2005

Quote from 5yrtrader:

I have found that with overbought/sold indicators the trader is better off buying when it is overbought and selling when it is oversold.

Then using for example the RSI would be counter productive, because using the indicators like the RSI buying it when it is overbought and oversold is like buying higher highs and selling lower lows.....hmmmm that is what trending is. I heard using Bollinger Bands but using a profit target is one way of using a counter trending technique.