Is counter trend trading a disease?

Quote from streetgangs:

it's strategy that works when it's not trending.
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Half right.

Here's the thing. Price is always doing one of two things: trending or chopping. And it does this in every timeframe, from tick charts to yearly charts.

Counter-trend trading is based on the notion that when price is trending in the timeframe you're focused on, it is simultaneously chopping in a larger timeframe. This is sometimes true but not always true.

The upper limit of the higher-tf chop is called "resistance" and the lower limit is called "support". The notion that tinkertoy indicators like RSI which are stuck in the smaller timeframe can detect this larger-tf chop should be laughable.
 
Quote from Trader.Fighter:

Or reversing, forming a new trend.
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Yeah that's covered in the part of my post you deleted. Why else would I mention support and resistance?
 
Quote from kut2k2:

Yeah that's covered in the part of my post you deleted. Why else would I mention support and resistance?
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You said it can do one of two things, it can do one of three imo.
 
when you are losing, that is counter trend trading.

so basically no one can avoid acounter-trend trading,since no one can predict trend precisly each time.

it is not a disease. pretty normal trading activities.

if you mean when it is dropping, you are buying, called counter trend trading. that is just the operation way you did.
or vice visa.

someone may wait when drop is stopped, then see green bars, then jump in, you can say this guy is trend following, but after he jumps in, the market stops goingup and go down, it is a counter-trend trade! (you think you are in the up trend,but it is in the down trend). ofcourse it continues to recover, it is a trend following method.

someone may wait until it breaks out of the newhigh, youcan say breakout buyer, but still the market may fall and resume adown trend, youare counter-trading a down trend.

so do notblame yourself for counter-trend trading. just admittoyourself, there is noway you can avoid counter-trend trading, that is why people are losing.

look FB fell back today, if you sell at 57, it goes up, you feel you are against the trend, but how about today's closing, you may say I am right, this junk should go down, I follow the trend!

the brutal fact is whatever strategy you use, you will always face a fact: you are in the wrong side of the market lots of time!

market drops, may continue,but may stop and recover, or stop and go nowhere, last one day or two days or months or years, may trend like classical textbook trend, may trend withits unique way,....

that is why you should base your trading decision not purely technically! you should follow your trading ideas, particularly trading common sense, the inbalance between buyers and sellers, and the triggers tocause the inbalance.

when I am count-trent trading(I think), actually I am trend following.
when I am trend following(I think), actually I am counter trend trading.

you feel it is confusing, that is why trading is not an easy activity.
 
Quote from trader198:

when you are losing, that is counter trend trading.

so basically no one can avoid acounter-trend trading,since no one can predict trend precisly each time.

it is not a disease. pretty normal trading activities.

if you mean when it is dropping, you are buying, called counter trend trading. that is just the operation way you did.
or vice visa.

someone may wait when drop is stopped, then see green bars, then jump in, you can say this guy is trend following, but after he jumps in, the market stops goingup and go down, it is a counter-trend trade! (you think you are in the up trend,but it is in the down trend). ofcourse it continues to recover, it is a trend following method.

someone may wait until it breaks out of the newhigh, youcan say breakout buyer, but still the market may fall and resume adown trend, youare counter-trading a down trend.

so do notblame yourself for counter-trend trading. just admittoyourself, there is noway you can avoid counter-trend trading, that is why people are losing.

look FB fell back today, if you sell at 57, it goes up, you feel you are against the trend, but how about today's closing, you may say I am right, this junk should go down, I follow the trend!

the brutal fact is whatever strategy you use, you will always face a fact: you are in the wrong side of the market lots of time!

market drops, may continue,but may stop and recover, or stop and go nowhere, last one day or two days or months or years, may trend like classical textbook trend, may trend withits unique way,....

that is why you should base your trading decision not purely technically! you should follow your trading ideas, particularly trading common sense, the inbalance between buyers and sellers, and the triggers tocause the inbalance.

when I am count-trent trading(I think), actually I am trend following.
when I am trend following(I think), actually I am counter trend trading.

you feel it is confusing, that is why trading is not an easy activity.
More...

I think you confuse the trend, with momentum.
 
This is not meant as an advice but some snippets from my personal trading journal that I made whenever I get beaten up by counter trend trading during strong trends.

counter trend trading is not a disease. it is just a way to trade mean reversions.

i define trend as smooth price moves in one direction beyond x points - with x being reasonably large.

if the price is dropping with momentum and you try to catch it, then yes you have that disease. irrationally you are assuming that the price will just make a V turn right away after you enter.
if it doesn't turn around and falls further and you add more to average down, then it is a disease.(some of my biggest losses are due to this)

if you wait till it puts a bottom and you enter when it is consolidating, you have better odds that the price could turn around in your favor. this is better than catching the falling knife scenario above.

it is also a disease if one does counter trend trading just because they couldn't make money in the initial trend. (kind of a revenge trading - i have done this a bit)

so imo counter trend trading is ok if you have answers to these questions prior to entering.
1. should i enter once with full size or average down using small chunks thereby managing risk with size? if price does turn around you are wondering if you should add more or just be happy with the $ made out of the partial size
2. what to do if the price continues its trend. where is the stop loss? - if you get stopped out, then are you going to enter in the direction of the trend or just wait till it puts another bottom for another counter trend trade.
2. what to do if the price moves your way. do you exit and reverse in anticipation of the trend continuing or just take a small $ and get out or take partial profits.


personally making counter trend trades work is dependent on the ability to quickly act to take small losses and not fight it.

Its better to focus on trying to enter the trend and make most out of it instead of taking counter trend trades.
 
Quote from mspkash1:

if you wait till it puts a bottom and you enter when it is consolidating, you have better odds that the price could turn around in your favor. this is better than catching the falling knife scenario above.
More...

Consolidation after a strong push in a defined trend is far more often than not the ideal entry for a measured move in the same direction, which is a price move at least equal to the previous move.

The odds are especially favorable if the consolidation occurs in a narrow range (flag or channel) or triangle formation.

http://chart-patterns.netfirms.com/continuation.htm

Narrow range consolidation lures in inexperienced counter-trend traders, who believe it's a reversal signal of weakness in an up trend or strength in a down trend. If they don't scalp a few ticks, their stops get triggered, adding fuel to the breakout.
 
The biggest challenge for counter-traders is not getting to the mean, but not missing the easy trade, which is the trend resumption, if any.

In other words, if you counter trade but you tend to miss the trend trade, you doing it wrong and this is what typically happens with inexperienced traders; they get lost trying to obtain a profit in the counter-trade, and as they waited they missed the entry with the trend.

First and foremost, you want to make sure you don't miss the easy trend trades, and then, and only then incorporate counter trend trading techniques and setups that won't interfere with your trend trading.
 
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