Why Traders Should Never Trade Against The Trend
Never trade against the trend.
The trend is your friend. There’s a very popular saying in the trading world, and it’s a quote that I’m sure you’ll have heard many times before. People repeat this saying for a reason, so let’s take a closer look at what it means and why it is relevant. “The trend is your friend” essentially means that the direction of the prevailing price action is more important than any particular price swing. You should respect the trend by viewing any corrections or retracements as opportunities to buy.
The trend is your friend. Your enemy is your ego.
Trading against the trend means going against what everyone else is doing at any given moment in time. If everyone is selling, it’s probably a good idea for you to buy; and if everyone is buying, it’s probably a good idea for you to sell.
The reason why traders tend to lose money is that they do not follow this rule religiously. In fact, most of them are convinced that they are smarter than everyone else and can beat the market with their own special strategies or techniques. This leads them into trouble and eventually bankrupts them over time—unless they change their ways before it’s too late!
It Is Much Less Stressful To Trade With The Trend
Trading against the trend is a very stressful and frustrating experience. The most common reason traders lose money is because they trade against the trend. When you trade against the trend, you are playing against the big boys and their big money machines. Because of this fact, it can be difficult to make money by trading against the trend.
The best way to make money in any market is by riding with the trend, which means buying when prices are going up and selling when prices are going down. This is easy enough when you have a clear understanding of what price action is telling you and how to use it in your trading plan, but it takes time and practice before you will become proficient at identifying trends correctly all of the time.
The Trend Will Eventually Prove Correct
Trends are powerful, and they are persistent. They don’t go away because you don’t like them, or you’re having a bad day, or you think you can make more money by going against them.
Look at it this way: if you’re trading stocks in a bull market, what’s the point of buying when prices are high and selling when they’re low? You’re just going to be buying low and selling high—and missing out on all that profit from the rising prices! The same thing applies if you’re trading during a bear market: if prices are falling, why would you try to buy at the bottom and sell at the top? Wouldn’t it make sense to wait until prices have stabilized or started to rise again before investing in them?
You might think that there is some kind of magic formula that lets traders make money when everyone else is losing (or vice versa). But there isn’t—no matter how hard they try or how much time they spend trying to find it. There is nothing more important than following the trends, because no matter what direction they take next, those who stick with them will always win out over those who try to
A Change In Trend Provides Strong Trading Signals
Before you trade against the trend, be sure to evaluate whether it is a valid change of trend and not just a temporary pause in the direction of the primary trend. When a change in trend occurs, it means that there has been an important shift in investor sentiment and expectations. This shift can be caused by any number of factors: changes in fundamental data, changes in technical indicators, or even new political events.
When you’re evaluating whether a market has changed its direction, look at both long-term and short-term trends. If there is no clear reason why the market is moving away from its long-term direction, then it might be time to start thinking about taking advantage of this new opportunity!
When it comes to trading, the trend is your friend. Always remember this, and you’ll save yourself months of frustration and loss.
The best advice we can offer to traders is to simply not fight the trend. Don’t try and avoid losses by exiting positions prematurely; don’t hold onto losing trades until your fingers are almost numb from pain; and don’t get greedy by trying to reap outsized rewards from your winning trades. Always remember that trading is a marathon, not a sprint. Keep the big picture in mind at all times, stick to your risk management rules, and never forget the importance of trends.
