Think Like A Trader Blog

Thursday, 1 October 2015

Don't Fight The Trend

Reading Time - 3 Minutes

This is one of the biggest challenges I faced as a trader. It plagued me for a long time and was not helped by the fact that I traded reversals. On ranging days all was fine and the account would grow. But on trending days? I would get eaten alive.

For some reason my mind just wouldn’t accept that the market was in a powerful trend and I continued to enter into reversals. It was almost as though after every losing trade, I would convince myself that the next one HAD to be the end of the rally and I would just need to hold the position for longer.

If I go way back to the very beginning, when I thought I had found the ‘Holy Grail’ when I stumbled across stochastics, I suppose that’s where it started. I found a technique that worked well… until trending days came along. And no matter how hard I tried, I just could seem to break the habit of entering into trades against trends.

You can get perfect signals on trending days, however they are much less likely to work. On very strong trending days, the reversal candle you identify can quite literally be the pullback before the continued surge.  Even when I could see that it was trending, I would enter into reversals because the signal was good and I convinced myself that I had spotted the ‘bend at the end of the trend’.

I didn’t like to be wrong, which is a problem shared by most traders as they learn. So each time I entered into the losing reversal on a trending day I would convince myself that it was just a temporary setback, the trend would end at the next signal.

Silly, right?

The best thing to do on trending days is to get out of the way of the trend. Jump on and join it rather than fight it. I now employ the eight exponential moving average to help me spot when a trend is weakening and even then I am wary. There’s a video on the YouTube channel that goes into how I use the moving average and also a lot more information on the training course.

If you find yourself being caught out on trending days then I would highly advise you find a way to identify trends and also a method of saving yourself from entering against them. I know it was one of the main areas that improved me as a trader.

I hope you’ve had a great trading week!

Training Site – or just click the training button on the blog site for more information.

1 comment:

  1. Just read article:

    Thursday, 1 October 2015
    Don't Fight The Trend

    I can relate.

    I ALWAYS think there are Securities that go DOWN when markets go Up & Down. This is WHY I go against the trend and keep searching for bearish trading methods.

    Is it worth it?

    Really appreciate a response.