Niederhoffer thinks "follow the trend" sucks

i am nobody said:
If you trade against the trend, sooner or later, you will catch the mother of all losses.
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That's not the point. Countertrend trading can be very profitable.
The problem with Vic was that he was in total denial about the very risky strategy of selling options NAKED. He could have easily used credit spreads instead and capped his losses.
But noooooooo, he was too greedy and wanted to capture the big premium for a low cost (spreads cost more in commission).
 
He sent me an autographed copy of his book along with a rejection when i applied to his second fund (i think matador )in1997
 
syswizard said:
That's not the point. Countertrend trading can be very profitable.
The problem with Vic was that he was in total denial about the very risky strategy of selling options NAKED. He could have easily used credit spreads instead and capped his losses.
But noooooooo, he was too greedy and wanted to capture the big premium for a low cost (spreads cost more in commission).
More...
Exactly, you wrote "CAN", but reality is more about "WILL". Probability is far more favorable for trend trading.
I can mathematically proof that:
  1. trading against the trend will always give SMALLER average profits per trade then trading WITH the trend
  2. risc reward ratio when trading against the trend will always be worse then trading WITH the trend
  3. statistically, risk on losing trades is much bigger trading against the trend then with the trend
And as I, knowing nothing about math, can proof this, it means that any child understands this.

Trading against the trend is like swimming against the streaming water and trying to break the world record on the 100 meters. If you swim with the stream breaking the record will be far more easy.
But sometimes people think that things should be difficult to be the best.
 
All this talk of trading against or with the trend...

But WHICH trend ?

The very long term trend may be up, the intermediate trend down or sideways and the short term likewise.

It is not as simple as some seem to think.
 
Also just because he apparently said "follow the trend" sucks does not mean he's saying to counter-trend trade.
 
Mo06 said:
All this talk of trading against or with the trend...

But WHICH trend ?

The very long term trend may be up, the intermediate trend down or sideways and the short term likewise.

It is not as simple as some seem to think.
More...
According to the theory behind the Hurst exponent, a time series can be trending (HE values close to 1), anti-trending (HE values close to 0) or random (HE values close to 0.5). A trader can profit from trending or from anti-trending but nobody profits from random except through pure dumb luck.

The trader determines the timeframe for measuring price action, so the real challenge is accurate determination of what price is presently doing in the timeframe of choice.
 
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