This argument is kind of silly in general. The fact is that trend traders don't understand the counter trend guys at all. This argument can rage on ad nauseum with everyone trying to decide who is right. I offer to everyone that there is no right and wrong in this debate. Both of the strategies can and are played successful everyday. The only question here is what can YOU do successfully.
Since this discussion is primarily dominated by the trend guys, I will play devil's advocate for sport and to give trend traders a specific example on how some of the faders win consistently.
Counter trenders or faders are students of market behavior. They know that after a run there is profit takers and bargain hunters. They also know that these people will be looking for a place to do so. Trend lines, Fibos, old numbers, and even news events give great opportunities to get into a counter trend trade cheap. They pick these targets and take their position on the first hicup in the trend. The big advantage the faders have is the ability to use a tight stop. They can do this because they usually have picked a specific area to take their position and a failure of that area is thier exit signal. Some of these trades are merely for the sake of 10 or 20 pips. Other times these positions can be taken in areas supected to be actual trend reversal areas. The best counter trend strategy I have used is to take a partial profit after the reaction to this price target and let a portion of the trade ride for the massive payoff that calling a reversal can bring. Using this partial profit strategy keeps the $$$ flowing positive while keeping you in the game to hit the big one.
Counter trend trading successfully takes a special feel. There is an artistic aspect to it. And, from what I have seen, a person either has it or they don't.
FXO
Since this discussion is primarily dominated by the trend guys, I will play devil's advocate for sport and to give trend traders a specific example on how some of the faders win consistently.
Counter trenders or faders are students of market behavior. They know that after a run there is profit takers and bargain hunters. They also know that these people will be looking for a place to do so. Trend lines, Fibos, old numbers, and even news events give great opportunities to get into a counter trend trade cheap. They pick these targets and take their position on the first hicup in the trend. The big advantage the faders have is the ability to use a tight stop. They can do this because they usually have picked a specific area to take their position and a failure of that area is thier exit signal. Some of these trades are merely for the sake of 10 or 20 pips. Other times these positions can be taken in areas supected to be actual trend reversal areas. The best counter trend strategy I have used is to take a partial profit after the reaction to this price target and let a portion of the trade ride for the massive payoff that calling a reversal can bring. Using this partial profit strategy keeps the $$$ flowing positive while keeping you in the game to hit the big one.
Counter trend trading successfully takes a special feel. There is an artistic aspect to it. And, from what I have seen, a person either has it or they don't.
FXO
Profit is where readiness meets Opportunity
Some people call it gambling.
