Better to Have to Slow Down than Speed Up
By Jay Norris
The following article is a reprint from May 2008
I’ve devoted a lot of time to learning to identify “trend” trades, and in teaching my clients the same. In doing so we had to understand “counter-trend” trades just as well, as we have to differenciate between the two. To gain that knowledge, particularly in something so rewarding, you’d have to be intimate with both.
In learning to wait for “trend” trades I learned A LOT on counter-trend trading. And I have to say there is definitely a time to counter-trend trade, particularly if you don’t have the advantage of trading London hours. And sometimes it doesn’t matter what hours you trade, the direction on the different time frames are not in agreement, meaning you are going to have herky-jerky price action AKA “counter-trend” trade.
I intuitively knew it was worthwhile to be patient and wait for the “trend” set-ups; and the bonus in that was learning how the market’s moved in the between time — and there is A LOT of between time in trading, AKA “counter-trend” trading. What I learned in being patient and waiting for trend trades was how, once the signal is given you can not hesitate because the characteristic of the market changes in a hurry. It’s like the difference between a walk and a sprint. Once a trend trade starts to set-up, you have to be poised to jump, otherwise you better be willign to chase it.
The biggest difference between taking triggers in trend vs counter-trend set-ups is in the execution. You have to be faster, more aggresive, with trenders. You won’t have the time to watch it lolly gag along and give you a double bottom (top) with divergence for a trend trade.
To master the art of trading we definitely have to be adept at both trend and counter-trend, and I can tell you it’s better to understand the nature of trend-trading first. If you’ve ever coached individuals for any length of time you know it’s easier to have to slow people down rather than try to speed them up.
If you like little bites and to take your time, you may be better suited w/ “counter-trend” triggers. If you are patient like a hunter, enjoy big bites, and are quick off the blocks you may be a “trend” trader.
Jay Norris is the author of Mastering the Currency Market, McGraw-Hill, 2009, and a trading instructor at Trading-U.com. To sign up for free memebrship at Trading-U.com and hear of upcoming educational initiatives go to: Registration
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. Risks include the potential that changing political/economic conditions may substantially affect the price/liquidity of a currency. Investors may lose all or more than their original investments.