Day Trading Against The Trend

Traders will always have their own rhymes and reasons to place the trades. In fact, they need to have a solid day trading strategy. Without a proper plan to enter and exit the markets, traders are simply risking their hard-earned money without giving thoughtful consideration into the process.

What I am about to post over here comes from my limited experience day trading the Nifty Futures and the EUR/USD. I am always learning and will continue to do so for the rest of my trading life!

Anyway, let us get into the core subject of this discussion. Should you place trade orders against the trend? Will it provide the traders with an edge over the rest of the crowd?

Buy the low and sell the high

Trading against the trend will allow the traders to experience a sheer thrill. And when the trade goes just as they had anticipated, they will feel elated. Good profits exists every time the market decides to reverse after making a high or low. If you manage to get into that trade correctly, it is possible to make a killing!

Too many successful traders think that trading against the trend is the aspect which allows them to stay apart from the rest of the group. Even the inventor of the candlestick chart, Homma Munehisa thought that catching the tops and bottoms will allow the traders to accumulate profits easily. Applying his techniques, it was possible for him to become one of the most wealthy person in ancient Japan.

Another prominent trader Paul Tudor Jones also emphasizes on the importance of trading against the crowd. Here is his testimonial – “I believe the very best money is made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms.”

I would like to mention that W D Gann also focused on price reversals. Yes, he always asked others to trade with the trend; but he never practiced what he preached.

Murrey Math is a simplified version of Gann’s calculations. Murrey offers the traders an easy way to set the current price action in a rectangle, so that they can know when to sell / buy against the trend.

Trading against / with the trend – this is a decision best left for you, the readers. Always trade with proper stop losses and try to exit when you have made enough for the day.


About Praveen Pious Francis
A part-time blogger who has a wide range of interests including investing in the stock markets across the globe and broadband technologies in India.

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