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Brian,
> Interesting. There's a lot of comparatively advanced math used creatively
> here to develop RJP's exact countertrend entry point system. Good food for
> thought and a way to spend a lot of time but is it really necessary?
As a purely discretionary trader I would think not. But some must trade systems
and have the programming skills to do so, so why not for them IF it makes 'em
money?
> So what's the pattern here? All these guys have tons of experience and have
> access to resources the average (successful) trader may or may not have.
> Experience is essential when developing systems that attempt to pick
> bottoms.
Experience is also essential for the non system trader if they are to
successfully "pick bottoms."
> Question: Is it the right for you? Based on the above, only if you have:
>
> 1. Have many years of experience
> 2. And/or Have advanced math experience
> 3. And/or Have the $$$ to buy in a decline, buy in a decline, buy in a
> decline (or sell)
Couldn't agree more. But then I also speak in defense of contra trend trades.
For instance there were numerous signs (through 19 yrs of trading experience and
use of a few good indicators built in a simple spreadsheet. I'm eons behind the
mathematicians on this list in their forte) that Monday's selloff was
exhaustive, and thus the end of the short term trend was near (and no, not just
because we closed down 500+ points). So yes, I was one of the contra trend
traders buying into what looked to be a dark hole on Tuesday morning's selloff.
It wasn't a bad day to be bucking the big trend, eh? But then again, the trend
was basically up that day so maybe we were in an uptrend? If so, I got aboard
very near the beginning of it by "picking a bottom."
> Well what do those do who don't have this? The answer is trade with the
> trend.
In agreement here, bigger picture anyway. There are almost always times during
the day when a contra trend position can be taken, and a new mini-trend (at
least) begins. But again experience is a necessary ingredient or, like you said
before I think, the risk of ruin is great.
> The message to me is that it's easier to make BIG money trading with the
> trend.
Easier and less stressful most of the time and over the long haul, but the
biggest paydays in my career have come from the contra trend trade with
increased size.
> Are there any others out there who want to defend countertrend trading?
I very much defend it on the very short term, but think it best to ride the
trend if you don't meet the criteria you laid out above. I speak from a
daytrading point of view however, so the question is when does one trend end and
the next begin? Like the mini-trend that started just after 3:30 in the spoos
today. Didn't trade it but there was a setup there to buy it and it was a trend
nonetheless...
--
best,
Mike
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