Trend Trading vs. Counter-Trend Trading

Trend Trading vs. Counter-Trend Trading

Many traders, believe it or not, aren't aware of what we're about to discuss here. Most absolute beginner traders try to catch tops and bottoms in the market, not even trying to trade the trends. We, like many other traders first starting attempted to do the same thing. We know this from not only our own personal experiences, but by teaching and talking to tens of thousands of traders that they tend to do the same thing. Many (if not most) traders feel that by trying to catch a market top or bottom is where the real money is. We on the other hand disagree completely. Catching just a little piece of a trend (and sometimes much larger than a little piece) adds up, not to mention easier (higher percentages) to do than trying to catch a top or bottom in the market. So, we thought by including this topic; Trend Trading vs. Counter-Trend Trading would be very helpful to you. We know this will give you more insight into both of these types of trades.

Let us first start out by saying that at least 80% of your trades should be those trading with the trend (as taught in my Lifetime Trading Mentoring Program - 'Trend Determination', etc.). The other remaining 20% or so can constitute counter trend (C.T) trades. We would highly suggest concentrating more (at least in the beginning) on the trend trades as opposed to trying to pick tops and bottoms (C.T trades). By not only teaching, but by speaking with students, especially beginners, we find that most traders simply just try to pick tops and bottoms as opposed to trying to enter the market with the (overall) trend. We'll go as far as to say you probably will not become a successful trader by trying to pick tops and bottoms when you first start off trading. Counter-Trend (C.T) trading takes a lot more experience. Believe us when we say that you'll not only find trading less stressful, but much more rewarding and profitable if you simply stick to trading with a markets (overall) trend. Look to make consistent profits utilizing the profit objectives (PO's) taught in my Personal Mentoring Program -- and of course you'll occasionally catch the bigger move (by utilizing the 'Trailing Stop' methods taught in this Course).

Of the 20% or so of trades that may become counter trend (C.T) trades, 80% of those trades should be buys. Why Buys? Simply put, because we've found that bottoms are much easier to pick than tops. If you think about it, the psychology of most traders are more biased to buying the market as opposed to selling the market as a whole. Traders in general seem to be more optimistic rather than pessimistic on the overall market. We've spoken to thousands of traders that have expressed to us that they feel more comfortable buying the market as opposed to selling it. We know that sounds ridiculous, and we agree, but many (if not most) traders, believe it or not, feel this way. That's one of the reasons why bottoms seem to be easier to pick than tops - traders are more prone to Buy than they are to Sell. Think about it, how many traders do you know that actually sell short? Not many, most traders buy in anticipation of higher prices. When the market gets extremely oversold and drops to levels where the big money comes in to Buy the market (oftentimes at a 5%, 10% & 15% overall market corrections), you'll oftentimes see the market move higher (spike up) and continue the markets (stocks) overall uptrend.

When the market is in a downtrend, the market not only drops three times quicker than it rises (making it much more volatile), but bottoms are put in place much quicker. This is evident in any chart you look at. On the other hand, when the market is trending up, the market generally moves much slower and much more gradual in nature. Therefore, trying to find market tops are much more difficult to do, at least that's been our personal experience. So, when attempting to buy on a Retest of a Low (Important), the market is generally in a Downtrend, and when attempting to sell on a Retest of a High (Important), the market is generally in an Uptrend. By knowing these two simple rules will help make Counter-Trend trading much more predictable in nature, rather than trying to buy when the market is in a-fall, or trying to sell when the market is going to the moon. At most, these rules will help prevent you from jumping in front of a freight train. Therefore, I suggest waiting for a retest of A high before looking to go Sell Short. Conversely, wait for a retest of A low before looking to go Long. Remember, Counter-Trend trades should only constitute roughly 20% or so of your trades. As mentioned before, C.T trades are definitely more difficult than trading with the markets overall trend.

A General Rule Of Thumb: When a market is Trending Up, the market tends to be a lot less volatile than when a market is Trending Down. Therefore, generally speaking a Down Trending market is much more volatile than when a market is trending up. A market falls roughly three times quicker than it rises.
          I truly hope you've enjoyed and learned a lot from this trading lesson. Please remember, there are many more to come in the following weeks, so please be on the lookout for them. And once again, please feel to visit my website www.YourTradingConcepts.com to read more about my extensive Lifetime Trading Mentoring Program.

Get all 20 Survival Skills for Traders here

What is Price Action?

Price action is simply the movement of price.

You see, many fundamental traders get wrapped up in the study of the management team, economic conditions, competitors, threats, price-to-earnings ratios and a whole bunch of other financial statement ratios to determine whether or not it's a good investment.

But, if the recent market crash has taught anybody anything ... it's that it doesn't matter how good a company is or how much cash it has ... the only thing that matters is whether or not investors would be willing to purchase the stock.

... and, the same holds true if you're trading the e-mini futures, Forex or options!

Price moves UP or DOWN based on what people are willing to pay for a particular stock, currency or commodity.

If investors aren't willing to pay the asking price ... the price will go lower until they find a buyer.

If investors aren't willing to sell their shares, lots or contracts at a lower price ... the price will go up.

It's the basic law of supply and demand.

And, as one of my friends always says: "There are reasons and results, the only thing that matters is the results."

... and, where fundamentals may try to come up with the reasons, the FACTS ARE IN THE CHARTS!

Master the charts and master your financial future.

Get all 20 Survival Skills for Traders here

Helpful Hints When Placing Entries & Exits In The Market.

Helpful Hints When Placing Entries & Exits In The Market.

          These numbers, believe it or not, are very Important when placing entries and exits in the market. I suggest using these numbers (whole & half numbers) for all market entries and exits when called for (i.e. when a potential entry or exit from the market is near a round [.00] or half [.50] number). In a nutshell, you never want to place a 'Buy' or 'Sell' order on a half (.50) or whole (.00) number when placing either your initial stop loss (ISL) or profit objective(s). On the other side of the coin, if you enter on breakouts you never want to place your 'Buy Stop' or 'Sell Stop' (entry order) on a whole number or a half number. You'll definitely want to be a tick above a whole number (.25) or below a whole number (.75). If you're near half numbers you either want to be a tick above (.75) or below a half number (.25). These crucial numbers (half [.50] & whole numbers [.00]) can help in entry and exit into the market. Take a look below to see what we mean:

Never buy 00's or 50's (for example: Never buy @ 1460.00 or Buy @ 1460.50)
Rather, buy .25's and .75's (for example: Rather buy @ 1460.25 or Buy @ 1460.75)

Never sell .00's or .50's (for example: Never sell @ 1460.00 or Sell @ $1460.50)
Rather, Sell .75's and .25's (for example: sell @ 1459.75 or Sell @ 1460.25)

Half Dectile Numbers: 1345, 1355, 1365, 1375, 1385, etc.
- Never buy or sell @ these whole (.00) or half (.50) numbers...
Rather buy @ 1345.25, 1355.25, 1365.25, 1375.25, 1385.25, etc.
Rather sell @ 1344.75, 1354.75, 1364.75, 1374.75, 1384.75, etc.

Dectile Numbers: 1210, 1220, 1230, 1240, 1250, etc.
- Never buy or sell @ these numbers...
Rather buy @ 1210.25, 1220.25, 1230.25, 1240.25. 1250.25, etc.
Rather sell @ $1209.75, 1219.75, 1229.75, 1239.75, 1249.75, etc.

Centile Numbers: 1200, 1300, 1400, 1500
- Never buy or sell @ these numbers...
Rather buy @ 1200.25, 1300.25, 1400.25, 1500.25
Rather sell @ 1199.75, 1299.75, 1399.75, 1499.75
Realize that floor traders tend to take prices to these levels (i.e. .00's & .50's) intentionally to stop traders out of the market. Notice how many times the high or low of a day, or any significant high or low that you see on a chart ends up in these half and whole numbers (i.e. 1450 or 1450.50). This is true of most all markets. So, if your entry or exit falls near a half (.50) or whole (.00) number, simply adjust your entry or exit according to what you just learned here.

I hope you've learned a whole lot from these Helpful Hints When Placing Entries & Exits In The Market. And please remember, there are many more useful and valuable trading lessons coming your way in the following weeks, so please be on the lookout for them.

Get all 20 Survival Skills for Traders here

Part 4: 20 Survival Skills For Traders from Todd Mitchell... (Trading Concepts Inc)

Now, let's move on to the last 5 Trader Survival Skills (16 thru 20) every trader must truly know and understand:

(16) Exercise Patience. Do not force trades when there are none.

(17) Exercise Diligence. Do your homework and preparation before each and every trade. Be willing to let time do its work. Hard work is required in this business.

(18) Anticipate, identify and take full advantage of momentum in the market. (for example, the 'Extreme Upside & Downside Running Patterns' as taught in this Course).

(19) Always select realistic entry and exit points and write them down. This goes hand in hand with doing your homework and preparation before each and every trade.

(20) Maintain a list of your current open trades, monitor them closely, and try to limit the amount of open trades you have on at one time. You really need to focus in on one market, and once you master it, then you can move on to trading other markets if you so desire. The E-Mini's have all the qualities in it in order for you to make as much as you want - as long as you master it - and that's what I'll help you do thru my Lifetime Mentoring Program.

          I hope you've enjoyed and learned a lot from these five - not to mention the last 15 Trader Survival Skills that you've received over the last few weeks. And please remember, there is many more useful and valuable trading information coming your way in the following weeks, so please be on the lookout for them.

 Get all 20 Survival Skills for Traders here