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>Date: Fri, 04 Sep 1998 09:54:22 -0500
>To: <bnm@xxxxxxxxxx>
>From: Stewart Taylor <staylor@xxxxxxx>
>Subject: RE: Taking Losses
>
>
>>Good for your friends and good for you. However, the probabilities favor
>>staying with a trend on a daily chart. That's a fact.
>
>15 years of trading (both ways) don't leave me convinced that it is a fact.
>
>>Again I think you're leaving out the context in which your friends counter
>>trend trade. The smart play isn't countertrend trade a market like Canadian
>>Dollar futures. If you must countertrend then finding a market that's not
>>trending as strongly would be better. This is the crux of our problem I
>>think.
>
>There are markets I don't fade. But generally speaking, the strong trends
inevitably give way to trading ranges and corrections and opportunities.
Don't get me wrong, I do follow trends when the develop (I have a long term
bond trade on from much, much lower), but I tend to do much better counter
trend (particularly when trading swings and short term). No, I wasn't
trading the bonds on the short side for the first day or two after the
breakout, but I have made several trades on the short side over the last
several days and several trades on the long side with about equal results.
>
>>Of course, aren't you an equities trader?
>
>No, Im a futures trader and have been for 15 years. I've never traded an
equity but am considering doing some now.
>
>>Again, countertrend trading a trending market isn't the highest probability
>>play for these reasons. Therefor I charcterize it as not the smartest play.
>
>Again, in your experience, but not in mine.
>
>>It's true: trading is about trading on the side with the highest
>>probabilties. It's also true the the highest probablilities are found with
>>the trend. A market that's trending weakly has a good play as it falls into
>>support or moves into resistance. For a stronger trend, say up, the
>>probabilities favor buying the dips rather than trying to fade it as it
>>approaches resistacne. The probablities say that it will clear resistance
>>rather than fall through support.
>
>>Of couse, trends need traders like you to keep them going. If you want to
>>fade a market like Bonds and S+P (when it's going up or down) then not only
>>are you subjecting yourself to unecesarry risk for comparatively little
>>reward but your chance of ruin goes up dramatically.
>
>Again, lots of ways to skin the trading cat. Frankly, I find this
paragraph insulting. "Trends need traders like me".... that's ok... My
institutions and I make plenty of money selling to the breakout guys on
upthrusts and springs and failed breakouts. How about this... you do
things your way, Ill do things my way...... even if you don't respect my
way (and actually I could care less) I will give you and your methods the
respect they deserve. I won't even claim that I know the truth. Obviously
you have a better handle on the truth than I do.
>
>Actually, my biggest gripe is that you are so all fired sure that your way
is so much better... when actually... it is just another way to skin the
trading cat. Anyway, Im done. Case shut. Good luck. Stewart
>
>
>>
>>
>>-----Original Message-----
>>From: Stewart Taylor [mailto:staylor@xxxxxxx]
>>Sent: Friday, September 04, 1998 5:03 AM
>>To: bnm@xxxxxxxxxx
>>Cc: omega-list@xxxxxxxxxx
>>Subject: RE: Taking Losses
>>
>>I have always been a counter trend trader and done just fine thank you.
>>Some of the best traders I know work the other side of the trend.
>>Charectorizing counter trend traders as "just not smart" is either not very
>>smart or a sign of inexperience.
>>
>>Why, in a business where there are so many ways to skin the cat are we all
>>so convinced that our way is the only way or even the best way? Frankly
>>I've known traders to do quite well using astrology, Gann, Elliott and some
>>of the most god awful techniques that I have ever seen. BUT: They all had
>>two things in common, they were comfortable with their methods and they
>>practiced very strong risk and money management techniques.
>>
>>>Why would you want to trade against the trend? I'm assuming you mean
>>>intraday trend, not daily trend. Trading against the daily trend is just
>>>not smart. The swings are smaller on the reverse than they are in the
>>>direction of the trend. The probabilities of a body in motion continuing
>>in
>>>that directions are overwhelming. Profits are small trading against the
>>>trend while the risk of ruin goes through the roof.
>>>
>>
>>Stewart Taylor
>>Taylor Fixed Income Outlook
>>Voice: 501-219-9774
>>Fax: 501-228-0963
>>E-Mail: staylor@xxxxxxx
>>Web Site: http://www.cei.net/~staylor/
>>
>>
Stewart Taylor
Taylor Fixed Income Outlook
Voice: 501-219-9774
Fax: 501-228-0963
E-Mail: staylor@xxxxxxx
Web Site: http://www.cei.net/~staylor/
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