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Countertrend

The art of trading in favor of the TrendWe have a clear bias of a psychological nature that basically consists of going against everything that experiences a movement in favor. When a trend is established, it always tends to last longer than we expect: _ It’s going to turn around now!, it’s going to turn around now! but it never does. All that time you’re waiting for a market to turn is precious time you’re losing to go in favor. You’re missing multiple opportunities by waiting for just one, the turn. And what’s worse, you’re probably even entering the market against it, with its consequent “bites” to your account. When there is an established trend, the best thing you can do is wait for a retracement of it to enter in its favor. Therefore: - Every time there is a trend, for example bullish, if you go against it at every resistance you find, you are trading counter-trend. - Likewise, if you go against it at every support, in a bearish trend, you are trading counter-trend. Many times prices stop at supports and resistances, and you may get a “pinch” but by doing so you are not trading in the correct way but as the market wants you to do.
CRYPTO:BTCUSDEducation
by CryptoCoBit
Countertrend Impulse StrategyCountertrend Impulse Strategy Countertrend trading is a well-respected way to trade. Combining it with the predictive power of impulse movements can help traders act on market reversals. This article delves into the components and practical application of this strategy, providing insights for any trader looking to enhance their trading skills. Understanding Countertrend Trading In trading, a trend represents the general direction in which a market or asset is moving. Trends are either upward, downward, or sideways. Countertrend trading, on the other hand, involves taking positions that are opposite to the prevailing trend. Recognising countertrends is vital, as they provide new opportunities in the market. Traders look for signals that a trend might be losing momentum, such as weakening volume or specific candlestick patterns. They then seek opportunities to profit from the anticipated reversal. Basic techniques to identify countertrends include using tools like moving averages, Relative Strength Index (RSI), and trendlines. By understanding and identifying countertrends, traders can position themselves to capitalise on potential market shifts, making it a fundamental aspect of various trading strategies. Impulse Strategies: An Overview An impulse strategy focuses on identifying and trading based on momentum changes within the market. An impulse in the market is a sudden and strong move in a particular direction, often triggered by news or fundamental events. The key elements of impulse strategies include identifying a sudden movement, analysing its underlying cause, and predicting how it might impact future price action. Traders often look for candlestick patterns, like engulfing candles, and momentum indicators, such as the Moving Average Convergence Divergence (MACD), to gauge these impulses. Integrating countertrend trading with an impulse strategy offers a method to identify when a reversal has weight behind it. It builds upon the foundational principles of recognising countertrends by adding a focus on sudden and significant market moves. This combination allows traders to recognise both gradual shifts and sudden changes in market direction. Impulse-Based Countertrend Trading Strategy This strategy involves a nuanced approach that combines the principles of countertrend trading with the detection of market impulses. Here's how it can be applied practically. To try your hand at applying this setup for yourself, head over to FXOpen’s free TickTrader platform. There, you’ll find all of the trading tools and indicators you need to countertrend trade. Identifying Overbought/Oversold Areas Using RSI: Traders use the Relative Strength Index (RSI) to determine when an asset is overbought (above 70) or oversold (below 30). If there's a divergence between the RSI and price, it adds further confluence, although it's not a necessary condition. Looking for Specific RSI and Candle Patterns: The strategy becomes actionable when the RSI moves back above 30 or below 70, coupled with an engulfing candle that is noticeably larger than the previous few candles. This pattern indicates a strong impulse against the prevailing trend. Setting Stop Losses: A stop loss is placed above or below a nearby swing point, usually just before the impulse. This protects the position if the anticipated reversal doesn't materialise. Taking Profits at Support and Resistance Levels: Profits are taken at nearby support and resistance levels. Traders often aim to gradually scale out of their position, allowing flexibility in response to market movements. Risks and Benefits of Countertrend Trading Countertrend trading can offer opportunities for profit, but it's important to understand both the risks and benefits involved in this approach: Benefits Opportunity in Reversals: Identifying and trading reversals can yield profits in otherwise overlooked market situations. Diversification: Adding countertrend strategies to your arsenal may offer diversification benefits. Risks Potential for False Signals: Countertrend trading might identify a reversal that does not materialise, leading to losses. Challenging Timing: Accurate timing of the market reversal requires skill and experience, and errors can be costly. Increased Volatility Exposure: This strategy might expose traders to increased volatility, making risk management vital. The Bottom Line In essence, combining countertrend trading with impulsive movements in the market can be an effective strategy. While it goes contrary to the typical advice of “the trend is your friend,” with the right setup, it can offer a way to capitalise on unique market opportunities. For anyone interested in employing these strategies, opening an FXOpen account can be a good first step toward putting these techniques into practice. You’ll gain access to a wide range of markets to deploy your skills and benefit from competitive trading costs and rapid execution speeds. Good luck! This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
2
Trading Counter Trend GuideAnytime we are taking a trade we're trying to build a case to why it's a good trade. Here the counter trend trader would be thinking: -Price inside 4hr DBR demand zone -Price overextended ridding the bottom of the BB for 10x candles in a row -Stochastic RSI is oversold -Imbalance, correction, imbalance, with potential correction time. -Average Imbalance wave to downside = 4.2% -The average Correction is 3.2% Would I buy straight up? no, but I'm sure some traders might. instead of confirmation IMO is the better play + considering smaller risk + quicker trade management + quicker TP as the trade is aggressive.
CEducation
by MoneyballAustin
Educational Series: Trading with the MACD (Part 4)Using the MACD for counter-trend signals is likely to lead to losses and more difficult trading experiences than you would like. With the downward channel indicating a downtrend , and if you were to look for MACD crossover below the zero line, to signal a buying opportunity... The first 7 buying signals show price climbing briefly/slowly to the upside but reverses strongly. Only in the last example, as price bounces off the support of the channel and a brief shift in fundamentals led to the trade climbing to the TP level. Remember : Countertrend trades have a 70% chance of failure. If you are relatively new to trading, look for trend-following trades first. In fact, even if you are an experienced trader, trend-following trades should still be the primary/idea set up.
Education
by JinDao_Tai
Tutorial | How To Use RSI To Find Turning Points ... or NOT!Hey Speculators - Happy Friday - welcome to another video tutorial, and thanks again to the @TradingView Editors for featuring my last post, which I've linked here, and is related to the topic on hand for today. That topic is how, and when, to not fight a trend. I'd suspect many traders are familiar with the Relative Strength Indicator (RSI), used to measure overbought and oversold conditions. In this video, I discuss what I look for when using RSI to filter trade signals and identify when strong is REALLY strong. The inverse would hold true as well (you know, weak, or really WEAK), but we all know markets never go down. :) RSI Settings for this video 5 Period Upper 88 Lower 12
CME_MINI:RTYU2021Education
by RodCasilli
2
The Psychological DANGER of Counter-Trend TradingI see many traders consistently trying to fade the trend, but be careful. In this post, I will explain the psychological problem that can arise from it. Every time you get something that you want in life or that is pleasurable, you get positive reinforcement, and your brain says "I want more of that stuff" and then the brain says: "Keep doing what you are doing" ---> Behavior is learned. (Your neurons in your brain got linked together). Once the behavior is learned, and the neurons linked, it is very hard (near impossible according to behavioral science) to extinguish this learned behavior! Old habits die hard. Thus, the trader keeps doing the behavior that over the long run will generate losses. WHY? because reversal points are momentary while trends are prolonged and if the trader is trying to constantly make money out of the market, he continues to do the learned behavior, hoping that "NOW there must be a big correction", even though a correction can be many months in the future. So now you are probably asking: "ok Mr. Ph.D. in psychology, what is your solution? I already learned the wrong behavior, am I doomed?" According to science, there is hope, instead of trying to extinguish the behavior, you need to re-write it with the new behavior (replace it with a new behavior). What does it mean in a trading context? That means that if you are in the past got burned from counter-trend trading, it is recommended to join the trend --> you will generate profits ---> positive reinforcement ---> newly learned behavior ---> ah-ha moment
NASDAQ:AAPLEducation
by ZoharCho
1
A look at the 10 most owned stocks by robinhood users 😂"Countertrend trading" and "We are oversold" these sentences just sound so stupid, I have a hard time believing this is a thing. Here are a few of my finest comparisons: "I put a pillow on my face and practice suffocated breathing". "I compete in sprints with my legs tied together" Huh but why? "Well 2 legs have more power than 1 obviously duh silly" You keep losing! "YES BECAUSE THEY ALL CHEAT AND ALL KNOWING INSTITUTIONS MANIPULATE THE RACES!". "I put my hand on the stove and now I am overburned way more than I should be, I will therefore keep my hand on and put the second one, should heal anytime". "Counteroxygen breathing", "Countergravity jumping", "Counterheat cooking", "Countermudtorrent walking", "Counterultratide kayaking"... "Stop buying umbrellas during this rainy season you fools! Don't you see we are overbought?", "Go to the pump station and fill your full car tank so you can stay at home don't you see Oil is oversold?", "Stop buying & drinking water during this heat wave you fools don't you see we are overbought?", "Stop buying ventilators and masks in this respiratory disease season you fools don't you see we are overbought?", "Stop avoiding sky stations in the summer we are oversold", "Why am I sunbathing by -5°C? Well clearly you are a noob and didn't notice seaside resort are very oversold this winter!" It sounds so wrong xd So, what are retail investors holding? First of all Tesla is not in the top 3 anymore, they have fallen to only #19. You have heard the theory a million times, and here the practical side of things confirms it: they hold and average in losers, they close at breakeven or take profit very quickly, they avoid winners, they get excited and buy at the top when the price goes parabolic. Robinhood users have beautiful taste as you will see now. Now, the top 10: ACB was very oversold when wise & sophisticated investors took this opportunity. Aha! It got much cheaper, they can buy more now. They sure know how to smell a great deal. Buying a car manufacturer on a downtrend for years and year, with declining sales and many financial issues, at the bottom clearly about to collapse and capitulate, smart, very smart. Buy parabolically as the stock capitulates? Pure genius. RSI at 7.50 was below 20. Yes, in times of crisis companies with bad fundamentals and in a downtrend for 2 decades tend to do very well. Excellent perceptiveness by millenial retail investors. Putting money in companies losing money and ignoring productive companies sounds like a great way to make a country prosper. WallStreetBets legends have been spotted betting on another success story. How much lower can it go it's already down 97%. You don't loose if you don't sell. (Multi)National-Socialist Umbrella corps time is soon over, I knew it! I can't wait for the big tech bubble to deflate. *Kondratiev I... I don't know what to say... This is... They have the right to vote... I'm scared... That's some serious mental disability... Idk if I can laugh about it... Not going to bother commenting. Same as previous. I am thinking of shorting it but it's best if I stick to my own domain. Those investors stupidity is astonishing, I am not joking, I am shocked and even a bit worried. Here's the top 10. Hey, but what about highly performing stocks? Unsurprisingly most of the top perf stocks are those expected to be a major part of the next Kond. cycle, and are seen as very important at the moment (but at the same time poor countries with old drugs are doing better than rich countries so... we'll see). Quick check of a biotech company not in the "best performing" ones (which are mostly small ones) but a rather big name that is in the S&P500 (barely thought) and doign very well: That's really something. Can you imagine how bad the world would be if there were no professional investors? Or if idiots keep reproducing at the current rate and smart women keep "focussing on their careers". 200 investors. That's it. OrganiGram has 90 thousand (265M market cap versus 10B for BIO). They'd rather invest in 4000 other companies rather than this one. What about another top performer, Kodiak Sciences (2.25B mcap)? They're not making positive earnings yet, but this is a growth stock, and we all know robinbros don't look at that, and we know they don't hold for years or decades. RobinTrack is going to become my main indicator... There are no big tank storage companies in the US I'm sad I wanted to check that. I already know what the result would be thought. What about the FMCG sector? Doing very well in this period of course (especially in the toilet paper area) Delivery also doing good Let's look at another top performer, a small cap... I think that's enough, I made my point. I did not cherry pick the worse possible examples. These people are STUUUUUPID. They are way too stupid to be trading even simple instruments in a protected environement and with regulations to protect them. You can throw all the regulations you want, they will still be stupid and do dumb things. And they think they can get their foot into Oil futures & other complex products. Tough love: If you constantly fight the trend and let your losers run you are an idiot and you will lose everything. There is a reason why the best in the world keep repeating the same advice.
NASDAQ:TSLAEducation
by MrRenev
9
Mass Hysteria example: The CoronaVirusNot sure what chart to use to post this but I think gold is a good one, no element has caused so much emotional reactions in humans so it's quite fitting. Fearmongerers (I wonder how many are just looking for attention) are using the emergence of this virus for making doomday predictions & getting likes from "the crowd". Paranoia spreads on social networks. We are supposed to have access to more information with the internet but all I see going up is mass hysterias, ponzi schemes, misinformation... Althought it also seems alot of people think critically and are able to seek out and learn the truth thing they were not able to do in the past when they smelled something fishy. What is it really? Coronaviruses are viruses that cause common colds type of diseases in mammals and birds. In humans, most forms are light, but a few can be lethal: SARS (Severe Acute Respiratory Syndrome or SARS-CoV), MERS or MERS-CoV (Middle East Respiratory Syndrome), and the latest one named nCoV (for now, the n is for novel I think). SARS appeared in late 2002 and no case have been reported since 2004. Most of it happened in china & hkg. Some chinese ate some bats or something and the virus mutated in the human host. So first of all it is not new, maybe a new mutation. This time it would seem that a chinese ate a snake. With SARS 8000 people got infected and close to 800 died so the death rate was almost 10%, with the new one the rate is probably 4-5% but it spreads more easilly. It's not nearly as big as ebola and aids. But the herd is treating it as a new zombie apocalypse. And as always... racism. Since the chinese bring those virusses to humans because they eat bats dogs snaked bugs etc, people are pointing it out. And news are complaining about it. But I mean... it's not like the little ice age violent scapegoating (in particular witches aka single ladies getting burned alive and also jew mass murders). And they ARE transmitting those viruses to humans because they eat "other" animals. This is alot of what trading is: while the monkeys get all excited and believe in nonsense and/or overexagerate reality, the smart speculator keeps a cool head and makes money from it. This phenomenon (mass hysterias/euphorias) has always existed and was recognized for millenia. In 1841 the book "Extraordinary Popular Delusions and the Madness of Crowds" was published, and it has remained a reference. Back in the 1920s it is said a famous financeer, Bernard Baruch, required anyone that was going to work for him to have read it, he sold all of his stock before the 1929 market crash and claimed lessons from this book made him do it. Imma just copy this from wikipedia: Same story over and over. We can just look at how this story develops and learn more about this phenomenon. There's some phases but does it always have to work the same way? 1 People learn about it and don't really care 2 Fearmongerers or shills spread their nonsense around 3 Sheep start noticing other sheep also talking about it and be afraid or excited so as they want to fit in they start caring 4 The herd goes full hysteria/euphoria and no this does not mean it's instantly over as it can last a while 5 It flops and the dumb money (or we can just call them complete braindead morons) is in denial 6 Two possibilities: Over a very long period it fades, OR the herd gets bored and looks for something else (hysteria crashes very fast) This is how I would describe it, for my first attempt. Here are the subjects the book I mentionned studies: Fascinating. Here are the first few lines from the book: I am eager to see mass panic over this new virus mutation with at least 0.00000000000001% odds of catching it and dying and spectate how crazy the sheeple becomes and how many lies spread and most of all how idiotic and grandiose they are :D A last word: I. LOVE. BITCONNNEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEECT!!!!!!!!!!!!!! ;)
TVC:GOLDEducation
by MrRenev
13
Looking at short interest of some US stocks [Crowded Shorts]Hello, I have to look at some details on a FX strategy and it is alot of mental effort, therefore here I am looking at high short interest on stocks that I do not even trade :) Let's look together at the most shorted stocks in the USA. What I think happens in Wall Street is every one copies every one. If a fund misses out on something that every one else has been doing, their clients will be unhappy. If a fund loses money but every one else did too "it was a hard year so it's normal. "We didn't do worse than the competition" and clients stay with them rather than look for another 2/20. I would classify groups of market participants in such a way: - sovereign funds - pensions etc - hedge funds - biggest fund in the world: japan families/housewives (they are all bound to the same laws and fundamentals, they are half the reason why crypto went up I think, the other half being USDT) - noob retail (represented via what robinhood users are doing) - banks but not that much - warren buffet - entire community positions (short interest for example) - twitter, wallstreetbets, other social networks? First, by dollar volume: Looking at the 2 other companies in the top 5 by % shares shorted that I didn't look at already (the 3 were match tdoc mdco): What are all these countertrend warriors? GM has an mcap of 50 billion (mdco is only 6 bil big for example), not in an uptrend, and it is not even in the top 150 most shorted stocks... GE: 100 billion market cap. Not in the top 150! What can more easilly shoot up 200%? A little scooter mcap of 5 billion, or a giant cruiser ship of 100 billion? It's not like they have 0 trading volume... I heard in the media that wall st shorting stocks was a bearish sign but I'd rather not listen to these clowns. Maybe it was far in the past. Maybe in some cases. Not when the whole herd does the same thing. In the top 150 most shorted stocks I look at the ones with the lowest float % shorted: Netflix already done, trending down Charter com already done, going up That's only a few examples, it would require way more study. But looks like the very shorted ones are bad to short, just the herd brainlessly piling up, under 10% seem fine. First impressions are that stocks shorted 5-9% might be a sign something is up, or at least it is not a reason NOT to short. But these > 20% like Tesla are just too much. Shorting > 30% is just asking for huge short squeeze candles and as well as gaps up. And using options won't solve the issue of the price going up and it being a loser just because everyone else is getting margin called. First impression was probably correct. The herd is brainlessly doing what others are doing. Trading as a individual competing with huge companies super computers etc is not that hard really, how obvious can it be to not short crowded shorts? It's really easy, ye 95+% fail, they're all just either irrational, braindead, or don't put in the thousands of hours required. Duh! What? You need over 10,000 hours of learning & experience to get anywhere (or at the bare min 5k for a +1 std dev IQ)? NO WAY! Wow this is so hard. You actually have to spend some time actively getting good like with anything else even video games? Impossible! Every one wants to be a countertrend trader smh. Not just countertrend, ALL TIME HIGH & 25% of all shares sold short countertrend trader. So stupid. There's no excuse. It is stupid.
NASDAQ:TSLAEducation
by MrRenev
7
Trading styles. Part 4/5. Countertrend trading.There are 2 types of people that do countertrend: - Those at the very bottom - Those at the very top (For those that did not learn maths post high school or is it in high school and didn't learn by themselves either: this does not mean that ALL people at the bottom or at the top do this... I think the majority of bottom feeders go for this, but for those at the top it is the minority like people that play noob champions in video games, bottom 10% perma pick them but they are rare at top 1% level - rare but not non existant). I have a correction to make on this series, I messed up. Trading styles. Part 1/5. The 4 different kinds of bottoms. ==> This does not fit in the list. It should be: 1/4 Pullbacks 2/4 Continuation 3/4 Countertrend 4/4 Ranging Bonus - Exotic strategies Bottom buying and top selling is an element of pullbacks and countertrend but should not get its separate thing. Countertrend can be going against the short term trend with the higher TF trend but this is rather buying pullbacks. Here I am talking about going against the high TF trend and getting out on a lower TF. As I have shown clearly on BTC this works. But as alot of bears that got decimated on the way up have clearly shown this is not that easy. You had to be really picky, enter as close to the top as possible based on many factors (and risk missing out obviously), and then babysit that trade closely. Most noobs still have not figured out how anyone that kept shorting could possibly have made money so... Clearly this is advanced. The problem here is that the bottom 10 or maybe even 33% really think they are at the top. They are completely delusional. Ego takes over or something. Just look at Robinhood casual investors... All going against trends. The OGs/pros keep repeating to go with the trend but they think they can outsmart everyone. Jesse Lauriston Livermore said around 100 years ago "I never buy on reactions... I never go short on rallies..." and "In my method of trading... I BUY after a stock makes a new HIGH". There have been people consistently profitable picking tops and bottoms (both pullbacks and countertrend) so it is not impossible, still, there are a microscopic minority and most people should not try going for this. The thing is, this is what I do ... Pullbacks and Countertrend. tried continuation and ranging too but it is too much I just do not want to lose my focus go do too much. I did not choose this it chose me. I have always been nitty picky and careful and "seeing things". Since I started, at the very start, I saw crypto alts pullback and give huge RR and high probability bottoms. Also going for breaks and such is annoying to me, have to be close to the PC, never goes how I want etc... Most people have clearly shown that they hate missing out! They keep repeating it they made it really clear! So why even consider going agaisnt trends? How stupid! You have to miss out all the time for it to work. If you follow the trend like most people and easiest way to make money, you get rewarded the more you FOMO, the faster you FOMO (as long as you know when to get out). More examples of predictable countertrend things: At the very first few times it happens ignore but after a certain amounts of times the patterns repeat itself the exact same way... Got to take risks to get gains. At some point probably stops working... With BTC there was also a period where someone dumped every day at the same exact time last year. Was easy to hop on and short just before it happened regardless of the trend, as long as the whale kept dumping. I think it lasted a good 2 weeks. I have a rule it is usually do not short anything at all time high (or buy all time low) unless you have very solid reasons for it... This sounds subjective. This is why only the best can go for it. The not best will find anything and count it as a very solid reason. Price can go up 150% before going down. So precision is necessary too. Actually my countertrend strategy is not even pure countertrend it is a mix somewhere between countertrend ranging and pullback. My other main strategy (got 2 main ones) is really going with the trend on a pullback. Do not trade corrections. And looking for the end of a trend sucks too but resistance + extension + momentum can probably work. Entering at the end of an ABC is cool it is what I do all the time, and and ABC might be a 12345 cannot always tell. This is a pullback trade not countertrade, even thought I think the new dominant trend is a bear one: Ah yes, most noobs buy something when it is "overbought", it is truly the most idiotic thing. Had to be somethign started as a prank there is no way. Unless you have insider info or saw a pattern repeat over and over going agaisnt strong momentum is idiotic. I do not even understand how those that do this are able to survive. They have help... No way they survive on their own. Mum perhaps? I also think people look at chart patterns that are only for continuation and apply them to go against the trend. There are those that incorrectly identify the trend thought... somehow... So I guess biggest dificulties:
BITSTAMP:BTCUSDEducation
by MrRenev
3
NVIDIA: FOMO bulls beaten badlyIn my previous screencast of 17th November, below all this text, is the story of someone (not from Tradingview) messaging me to ask if NVDA was good to buy. They were disappointed when I simply said "No". In the current screencast I follow up on how the FOMO bulls were punished for attempting to hunt a gap too early. This screencast is not advice. I am not saying that NVDA will not rise again. The point of this video is solely about appreciating when not to go in . I'm not saying that now is a bad time or good time to enter long. There are lessons in this: 1. If you're with the trend it can be your friend, else it's your enemy! 2. Avoid news and social media crowd sentiment. 3. Avoid gurus.
NASDAQ:NVDAEducation
by Captain_Walker
Trend is your friend -[A lesson](NEVER GO AGAINST THE MARKET)EURAUD I learnt a lesson for lifetime here: I closed my short early around the 4th LL(MY TP had reached) : Now i wanted more so kept my longs but extinguished my Shorts. I had long positions buildup on every lower low considering the EUR to overpower AUD fundamentally. But it never occurred as you can see I did exit my longs during the Asian session as I saw the LL break but it was a fakeout for the session. In the End the fake move turned out to be the original move. How biased I became doing TA to justify My Longs and over 400$ in draw down(Wiping off all my gains for today and yesterday.) I made an A symmetric triangle for tend reversal then searched the web and realized it was a continuation pattern my mind played tricks on me. As soon as the Triangle broke I got out of the trade as I couldnt see my gains go to -ve.(So now im neutral for the week. All hardwork gone just cause i kept adding to my loosing position ) I even made a Inv H&S as you can see to justify that my long position was valid and shouldnt have closed em in loss. But thankgod I did Finally, friends be careful out there never go against the trend. So my holiday starts much sooner gonna take a breather here and start back again from monday. I Had my analysis of downtrend did take the trade. in-spite of that my mind kept playing tricks on me to add counter trend positions and IDK what I need to do to not make the same mistake again(Read more psychology books?) Any help would be wonderful.
Education
by blankz369