Quote from Lance Carson:
What a coincidence, exactly my experience today, reading these posts. Why do seemingly good traders that can roadmap the market so well make such a NO BRAINER mistake of shorting an UPTREND Market when even the statistics are screaming DON'T GO THAT WAY JACK !, lol ( beyond my comprehension)
I dont want to argue or anything, I am just going to respond on a few things I have mentioned in the past that coincide with why I trade countertrend at times. If you didn't notice both countertrend trades moved over 5pts in the money within 15 minutes, I was just going for a larger profit target. I have also stressed many times that I always reduce my trade size on countertrend trades and reduce size even more on option expiry because that is when manipulation is at its highest.
Here are some reasons why I trade countertrend at times:
1) The risk/reward is the best IMO. Catching the reversal trend at the exact point and riding it down through all timeframes warrants massive profits. A point can be made that when trading with the trend this can occur as well but the odds are less likely because you are getting in after a trend is well established which means it is closer to maturing rather then beginning. The definition of a trend will also vary from market participants.
The issue why most people fail trading countertrend is because they lack an edge and dont understand that they are going to experience more losses then trading with the trend. This is hard on the psyche, which leads to loss of discipline and lack of confidence/conviction.
If you have strict criteria that results in an edge, position sizing, and a good risk/reward you will make money over time trading countertrend.... guaranteed. 95% of traders do not use 1 of those yet alone all three when trying to trade tops and bottoms.
2) Its a matter of the timeframe. If I was trading off a daily or weekly chart I would be long with B1S2.
3) I cant say it enough about daytrading... The trend is your friend until its about to end. Why would I want to be buying everything when I know the probability of going higher is less than the market moving lower. If anything at all just be flat and look at a different market. This was the case when I posted in the forum I was getting agressively short 2 days prior to feb.27th. I had the biggest day of my trading career on a countertrend trade. I am sure that many people trading with the trend gave back a whole lot more then the money they had made trading with the trend the past month. The same scenario with the bear market of 200-2002. People made millions and then gave it all back and a lot more.
These are the reasons why I have allowed for ONE countertrend setup in my trade plan. It is always a very low risk entry going for a large reward. It works for me, but for most I will look crazy because everyone is made to believe that trading with the trend is the only way to take consistent profits out of the market.
-Apex
