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GREHERT@xxxxxxx wrote:
> You are absolutely right! Why would anyone want to go against the underlieing
> trend when following the trend gives you a powerful and necessary edge... and
> you can't be profitable without an edge.
I've been away from this group for quite a while - this seems like a good one to
jump back in on.
The way "trend" is going to be defined in a given situation is dependent wholly on
the timeframe referenced - while one may say that a market is in an uptrend over
the last few weeks, this of course does not mean that this is the case over the
last few minutes, say. It is never the case that something moves in one direction
only for very long, rather we have moves in both directions of varying magnitudes
and lengths. So - do we mean here that we ought to follow trends when longer term
trends are going the same way? Again, this is relative - I could be using a 5
tick chart for the longer term chart, and trading the 1 tick. Whether this is
even a good idea *universally* is at the very least highly questionable. For
instance, if you are looking to buy pullbacks (or short rallies), you most often
would be fading the recent bias, and this can be a powerful strategy if applied
with the right amount of skill.
Presumably, your "edge" would be to spot patterns that have a favorable
probability of repeating, regardless of the periods that are referenced, and
whether or not the longer term bias is for or against your desired position.
There is no reason whatsoever why an instrument cannot be played both ways
regularly, providing it has sufficient volatility and trades in a manner that
profitable patterns can be discerned. This would certainly be true for S+P
futures.
Regards,
A.J.
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