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How do you trade counter trend trade? Experience traders, mind to share your opinion?
Call me a stubborn greedy man in the blocks. I've been trade seriously for 2 years as my primary job (if my 4 years learning curve doesn't count). Mining 300 pips per week in average. But winners/greedy are not quit, right? :)
Lets take EUR/USD down move lately. It is bear and every body push their short button including me. And yes we drink the milk pretty much. Some take their profit near their strong support line analysis, or trailing their trade until it hit, or simply use the exact numbers to milk the cow.
It fell until 1.2143
Then, the bounce came....
And we have a pretty bull for almost 500 pips in just 3 days. Quite a lot for my greedy crooky eyes. And here comes my question:
How do you analyze where the price will stop to fall? Based on what analysis? Round numbers? Pivot? Fib extension or others (share please...)
IF you put your long trade, what is the trigger and what is your exit? It is like catching a fallen knife trade but probably there are good traders to catch it
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about 1 year ago
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First of all, having been a full time trader for over 20+ years teaches you that doing such thing is silly. The odds of price respecting support and resistance lines are 50/50 especially in todays markets. Understand that if big money wants to push money around for what ever reason, they are going to do that regardless of how significant a support or resistance line maybe. In order to trade counter trend you must have a fairly large account balence or if you dont trade small lot sizes.
about 1 year ago
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Answers (2)
If you want to "catch a falling knife," then maybe you can look at indicators that are based on fundamentals than simply on charts. One indicator that comes into mind is the commitment of traders report... Through the commitment of traders report you can find out those times when there the number of bulls or bears is grossly tilted to one side. If there are no more buyers in the market, who will take the opposite side of sell trades? That's right - nobody. By using the commitment of traders report, you can spot the times when market sentiment is at an extreme and then match it up with price action. For example, if the net short positions on eur futures on the commitment of traders report is at its highest point in say, 20 years, and match it up with dojis/hammers on the weekly/monthly chart, then the odds of the eurusd reversing will be far greater than simply using major support levels
about 1 year ago
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Thank you. Since the COT report comes out once a week, I usually use it on the weekends just to see how traders are positioned. It is really only significant when traders heavily positioned in one direction. You also need to use it together with price action. Weekly and monthly charts are more suited for this one. :)
about 1 year ago
The "riskiest" looking traders are usually the ones the yield the most profit. Last year, the EURUSD topped out at 1.51ish and has dropped since then. Maybe you could take a look what the COT report said during that time and paired it off with resistance at the 1.5000 region (very important psychological barrier). You could put a big 300 pip stop, which would've been roughly equivalent to the EURUSD's weekly average true range.
And how about those big hot shot traders who were saying the housing market would burst? They're swimming in cash now on their shorts.
about 1 year ago
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I rarely take counter-trend trades but, when I do, I usually place my orders at significant support/resistance levels. In your EURUSD example, going long at the 1.2150 area looks okay since the pair seems to have difficulty breaking below that level. I'd probably put my profit target at the closest resistance level in sight. But I would place a tight stop (at most 50 pips) so that I'm out of the trade in case there's a breakdown and the downtrend resumes.
about 1 year ago
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Open Questions in Trading Strategies
Resolved Questions in Trading Strategies
- What is intraday position? And how does it differ with overnight position?
- What is scalping? How profitable is it?
- Which indicator are you using? I know there are tons of indicators out there.
- Before you begin trading, do you set a certain goal to reach? If yes, is it important?
- How can I decrease the gap between entry and stop loss?
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Thank you Ninja. Never thought about that. I know you are a short time trader, a very good trader to tame "the beast" indeed. Do you use COT as your additional information? How do you weigh the information along with your trade? I think it is not easy to acquire COT with the trade especially if you are an intraday/ scalper. But who knows?
Read your ebook already and miss your write on Babypips :)
about 1 year ago
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