thread: Never Go Against the Trend?

quote The probability of a winning or losing trade is not 50/50 only because there are 2 possible outcomes. Trends in the financial markets don't form and persist because of a human weakness in calculating probability of consecutive outcomes from similar events.

This has been discussed, sometimes heatedly, at Big Mike's forum. Check it out if you wish.

The reality is there are only two choices: win or lose, and they all have a an equal weight. There is a 50% chance either will happen.

That is not to say, that trading can't be made to be better than a coin flip. You are able to do all the ideal research, utilize the ideal indiors, know price action just like you know the back of your hand, and create a system or method that's 70% winners to 30% losers. However, any individual trade still only has a 50% probability of winning and a 50% probability of losing(again, for the sake of simplicity and simpletons like me, I'm leaving out split even trades or trades where the single loss is commission costs).

It is likely to maintain the zone. Where every trade you make contributes to profit. So while you may get a greater winning edge at the moment, the absolute probability of the outside come on the next trade remains: Win 50% Lose 50%.

So far as trends go, this doesn't have anything to do with the invention of trends; instead the manipulation of those. Which is why great traders enjoy the late Tom Willi said, trade like the trend won't ever end. However, in doing, you still haven't changed the underlying reality that the trade is either a winner or a loser.

quote This is one of these wired dichotomous conditions where BOTH items are true. Let's take a peek at a coin flip. The opportunity of switching heads is 50%, and also the prospect of switching tails is 50 percent. Now assume we reversed the coin 10 times and got 10 tails. What's the probability of getting tails on the upcoming flip? That's right, 50%. This never changes. However, the are such things as MOMENTUM, STREAKS, and TRENDS. There is greater edge in choosing tails as the outcome of the upcoming reverse due to the visible Momentum, Streak, or Trend. There...

The probability of a winning or losing trade is not 50/50 merely because there are 2 possible outcomes.

Trends in the financial markets don't form and persist due to a human weakness in calculating probability of consecutive outcomes from similar occasions.

On who,s time horizon if we ascertain trend?

The trend is relative to a egy so if according to your egy it's a fad, do not go against it.

On who,s time horizon should we ascertain trend?

Does this mean that the probability is that I'll lose money going against the trend? If that is true is that my expected value is positive when I proceed with the fad whatever trade I create? Do you get my point? If my expected value is negative if I move against the trend, it's positive if I proceed with it! OR It does not matter if you go for the trend. There are not any tendencies. All trades are 50/50 possibility of profit!

Yes, you can go against the trend if you're sufficient skilled. In a trendy market, price makes some retracement. If you can find them you will make money. But without appropriate risk management policy going against trend means suicide. And proceed with fashion unless it bends. It means that you can follow the trend untill price makes reversal. Now whether it's alteration or retracement that is the question. Here's the spin. Hence the conclusion is that you have to proficient enough to endure here.

quote How do you quantify probability? Can not it depend on your own system? Additionally, the market breaks out at the beginning of a 1m candle not 47 minutes to it.Atleast which is what I discovered.

I quantify odds by looking at what has happened in the past on the chart. As they say if something has happened many times in the past, it most probably will happen again in the future.
And some men and women who appear to be profitable says that if you go for the trend you'll most probably make profits since the trend generally doesnt stop straight away, but if you enter against the trend that you cant always know when it'll reverse merely to keep the trend and that may lead to loss. This way I notice there are more chances to profit by moving with the trend.
hope my explanation was clear enough.

But sure it is contingent upon the tradingsystem you use and interval. I was considering a trend following system (in this case the short term trend).

Does this mean that the odds is that I'll lose money going against the trend? If that's accurate is that my expected value is positive if I proceed with the trend whatever trade I create? Can you get my point? If my expected value is negative if I go against the trend, it is positive if I proceed with this! OR it doesn't matter if you go for the trend. There are not any trends. All trades are 50/50 chance of profit!

Each trade, whether or not with the trend, has to be measured on its own terms, therefore it is pointless to speak of negative or positive trades, because if there is a negative expectation, you just don't accept the trade. All trades must get a positive expectation, otherwise why choose them? The trend is your friend, but we all know that trading the markets is nowhere near as simple as merely jumping in after a trend has been established, though, it is very important to trade with momentum on the side, which is not the same as' trend'. Trading with momentum is key, as is learning to comprehend when momentum has shifted from one facet to another.

Does this mean that the probability is that I will lose money going against the trend? If that is true is that my expected value is positive when I proceed with the fad whatever trade I create? Do you get my point? If my anticipated value is negative should I move against the trend, it is positive if I proceed with it! OR It does not matter if you go for the trend. There are no trends. All transactions are 50/50 possibility of profit!

This is one of these wired dichotomous conditions where BOTH items are true.

Let us Look at a coin flip. The opportunity of switching heads is 50%, and the chance of switching tails is 50 percent.

Now assume we turned the coin 10 times and got 10 tails.

What's the likelihood of getting tails on the next flip? That's right, 50%. This never changes. However, the are such things as MOMENTUM, STREAKS, and TRENDS. There is greater edge in choosing tails because the results of the upcoming reverse because of the visible Momentum, Streak, or Trend. There is not as much edge in choosing heads as the consequence only because heads is due.
Yes, even the law of large numbers tells us that if you flip this coin enough times, the result will tend towards an even amount of heads and tails (i.e. 50/50). But during any photo of time, the outcomes can fluctuate drastically from the absolute probabilities (i.e.50/50).

I normally despise gambling references with respect to trading, but this is a telling one. Some years ago, Vegas installed electronic screens on the roulette tables. These screens would reveal the past numbers for x number of spins. If the distance the ball landed was red, the amount displayed was red. If the distance the ball landed was black, then the amount was black on the screen.

These new screens resulted in an immediate and large gain in the revenue roulette earned for the casinos. Why? Since the gambler or newcomer would see 3 red numbers in a row on the screen, and instant set a bet on black. In the end, leaving aside 0 and 00, the probabilities of black and red are 50/50. So if we have had 3 reds in a row, then black must be due. Vegas isn't built on winners, so what would you think the majority of these people did? That is correct shed.

On the flip side, what did the pro or professional gambler tend to do? He bet on red . Sure, the absolute probabilities stayed 50/50 (leaving 0 and 00). However, the expert or professional gambler recognized an observable trend, or streak, and tended to bet with that.

Once we discuss the Forex market, we are speaking about the market with the maximum propensity to fad. So while the likelihood of any one trade is 50/50 (leaving aside break even and commission costs), there's a greater edge in trading with exactly what the market naturally wants to do-trend.

ofcourse it is likely to go against the trend and create a profit but the likelihood is lower. You CAN lose, doesnt mean you'll. Why go WITH the trend? Since the likelihood of making profit is higher. In case you're newbie, you have to know how to read the charts and how to find the trend. You can aswell lose money even if you go for the trend. Again, it's all about probability. Trade ONLY if there are high likelihood signs in leadership WITH the tendency, avoid everything . That's a key. There are little trends and large trends in longer...

how can you quantify probability? Can not it depend on your own system? Also, the market breaks out at the beginning of a 1m candle not 47 minutes to it.Atleast which is what I noticed.

Ofcourse it's possible to go against the trend and create a profit but the probability is reduced. You CAN shed, doesnt mean you will.
Why move WITH the trend? Since the probability of making profit is higher. In case you are newbie, you need to understand how to read the charts and how to loe the trend.

You may aswell lose money even in the event that you go for the trend. Again, it's all about probability. Trade ONLY if there are high probability signals in leadership WITH the tendency, avoid everything . That's a secret.

There are small trends and large trends in shorter and longer timeframes. To find the fashion look at least on daily chart and over. Google what's trend, how to loe trend etc..

You want to discover a tradingstyle you are familiar with. 1 way of trading is loe the trend on D1, switch to H4 chart and wait for a pullback AND a continuation signal pointing to trend direction and enter direction of fashion. How long to maintain a position? I dont understand. Experience will tell you. Few hours, few days, who knows. This might seem simple and it is not always simple. I advice you to exchange on demo account until you understand how it works. Learn the fundamentals of forex, risk management etc. it is important!