It is very difficult to look for a black cat in a dark room.
Especially if she's not there.
Confucius

In the previous article, we looked at trading against the trend. Agree, the phrase “trading against the trend” itself sounds quite strange and hurts the ear. It's like "driving in the opposite direction." Is this really possible? It turns out that it is possible, and with the proper professional level it brings good profits. But first things first.

Let's remember the theory

We already know that a trend is a directional price movement. Trends are conventionally divided into: short-term (days), medium-term (weeks, sometimes months) and long-term (years). For example, throughout 2017 there was a pronounced bullish trend in EURUSD (this does not happen every year). However, during that same bull year, there were quite a few bear days, bear weeks, and three bear months (February, September, and October) when the price moved lower. Shouldn't we sit for three months without work?

The essence of trading against the trend is not to miss these powerful movements against the main trend, to make them work for us, to bring profit. It's not as difficult as it seems.

For this we must:

• recognize the long-term trend and
• work against him on kickbacks, i.e. follow the medium-term (or short-term, depending on the situation) trend.

Keeping up with the market

The market cannot constantly move in one direction (otherwise everyone who guessed the desired trend would be a millionaire), it inevitably rolls back a little against the main trend, then moves forward again. This can be expressed figuratively as follows: a person takes two, three or four steps forward, one back, then three steps forward - two back, then forward again, and so on endlessly. It is in this “reverse step” that we catch the market.

What is the main complexity of this trading system? The fact is that trends always unfold without warning, sometimes almost instantly (and sometimes without them), sometimes a little more slowly, but still - no one warns anyone. You need to see, think and act for yourself.

So, we have figured out that it is correct to call “trading against the trend” “trading against the main trend along a short- or medium-term trend.” Again:

• The main trend has been identified
• We clearly understand that he cannot move in one direction forever,
• We waited for the pullback and took profit on it.

That's it, there is nothing more. Only this way, consciously, and not “running” after the market, reacting to every fluctuation.

For clarity, we have opened a terminal; you can also open a demo account there to test your operating tactics.

Black cat in a dark market room

It is important not to confuse trading against the trend with the favorite pastime of many generations of investors and traders - searching on charts. In history (historical data, archive of quotes) this is a completely harmless thing: “Here is the bottom... and here is the top... if I had opened here, then... and if I had closed here, then the profit would have been such and such...”. In real trading, these searches can end in ruin. The “top” you find will turn out to be a normal correction, the price will continue to move up. The “bottom” you discover in some “third under wave of Elliott’s fifth wave” will only be a stop on a long journey down... Don’t look for black cats, act consciously.

Success Condition

The ability to “turn over”, i.e., becomes vitally important for this trading system (and for all trading in general). exit an obviously unprofitable position, stopping losses, and open in a direction that brings profit. Technically - no difficulties, just a few clicks of the mouse in . Psychologically, this is a huge difficulty for many, especially novice traders. We will talk about this in a separate article.

How to trade against the trend

To ensure that your trading using this trading system is effective, as indicated in our article:

Buying a CALL option

In order to buy a CALL option using a countertrend trading strategy, you must:

1. From the list of currency pairs presented, select a pair with a long-term bearish trend;

2. Choose the moment when the short-term trend will go against the long-term one, i.e. “catch” the bullish trend (a good signal is a breakout of the daily high price);

3. Buy a CALL option and exit the market, taking profit:

Buying a PUT option

In order to buy a PUT option using a countertrend trading strategy, you need to:

1. From the list presented by the broker, select a pair with a long-term bullish trend;

2. Choose the moment when the short-term trend will go against the long-term one, i.e. “catch” a bearish trend (a good signal is a breakdown of the daily minimum price);

3. Buy a PUT option and exit the market, taking profit:

• Trading against the trend requires a higher professional level than, for example, those discussed earlier. You can’t leave it to chance; it requires increased attention, i.e. time. If, when trading with a trend, it is even useful to sometimes turn off the terminal and calmly let the profits flow, then it will not work against the trend. You are obliged to constantly “keep your finger on the pulse” of the current one.
• The above (increased attention) should not be expressed in fussiness, these are two different things. One of the first signs of professionalism, that you already understand something about the markets, is the realization that prices that appear to move very quickly are actually moving slowly. Don't make a fuss. If you act correctly and comply, you will have enough time to “turn over”.
• Learn to “turn over” on a demo account; ideally, you need to bring this most useful skill to automatism. Online, on different currency pairs, on powerful movements (they often happen) - open against the trend, with a significant price move in the opposite direction (for example, 150 points) - open along the trend, gradually reducing unprofitable positions until they are eliminated.
• Don’t try to monetize, make a profit, at every market fluctuation, you won’t succeed. Taking part of the profit on an obvious trend is our task, and it’s quite realistic.

Real trading with broker Finmax

In order to buy a CALL option in , follow these steps by going to the website

In this article, I would like to briefly and as reasonably as possible talk about why I consider trading against the trend to be a trader’s mistake and tell you why you should not go against the trend!

In order for this conversation to be clear to both you and me, we need to start with what a trend is. I wrote about this in a separate article:

A trend is a state of imbalance when the price updates its highs and has the force of movement. Let’s start right away with an example and use it to consider the disadvantages against trend trades:

Let's look at this example of a trend section of the chart on the M30 time frame! A fairly normal trend that is often found on the charts of various instruments.

Why trading against the trend is the wrong approach:

1. A trend is characterized by constant updating of extreme points, and transactions against the trend are limited by the nearest resistance! That is, the first disadvantage of a “counter trend” is the low potential of any transaction against the trend, limited by resistance or support. The potential of a trade along the trend is not limited by anything and the trade can move along the trend for several days or weeks; holding a trade against the trend in most cases means either a loss or break-even. The potential of a counter-trend trade can only be revealed if we hit a reversal, but there is no way to determine when this reversal will happen, and guessing and entering at random only leads to losses!
2. In most cases, trend movement happens much faster and it is much easier to profit with a trend than against a trend, let's look at this with the example above:
   Just look at what corrections there were and what waves followed the trend! The second disadvantage of the “countertrend” is that in more time we get less profit!
3. When trading against the trend, we are forced to constantly be at the terminal, because at any moment, very quickly, the trend can resume and we will receive a stop loss if we do not react in time and close the profit, if it has not reached the take profit level. If we opened a trade following a trend, then we don’t need to worry so much, because the probability of a trend continuing is always higher than the probability of stopping it! The third disadvantage of the “counter trend” is the forced constant control of the transaction
4. Technically, counter-trend trades are much more complex, because the levels for entering along the trend are always visible and understandable, but the levels for entering against the trend may simply not exist:
   I have noted the levels for excellent trend entries on pullbacks, but how to enter against the trend? Why push away? From the levels that were several years ago? They are no longer relevant and more than half of the entries will be doomed to a loss from the very beginning! And the most important thing is that we could enter a trend once and wait for it to end, or for consolidation, which often ends a trend, I wrote about this in this article: Total the fourth disadvantage of the “counter trend” is the technical complexity of trading and determining entry levels

Now I have a question for you: does it make sense to use strategies that work “against the trend”? I think the answer is obvious, of course not!

Any more or less experienced trader will firmly answer the question “is it possible to trade against the trend” - no! Well, or almost anyone... After all, some even have a strategy against the trend!

I myself constantly repeat in the description of each strategy - do not trade against the trend, it is dangerous! But does everyone listen to this advice? If so, then why are there so many leaked deposits?

Over the past month, I have been watching the ruble exchange rate and, accordingly, the USD/RUB currency pair very carefully. I have already written about what is happening with the ruble and what will continue to happen in this article. If you haven't read it, check it out!

In today's article I will show you how you can take advantage of the market situation and make good money...

Example of trading against the trend

Even a completely novice trader can understand that now in the foreign exchange market, on the American dollar/Russian ruble (USD/RUB) pair, there is a bullish trend. To do this, just open this pair in your terminal on the H4 timeframe and you will see the following picture:

(when clicked, all screenshots enlarge)

But, as you can see, the trend does not follow a straight line. So-called rollbacks (rebounds, corrections) occur, and if you notice them in time, you can make money by trading against the trend. Like, for example, in the following screenshot:

That is, if such a correction is almost invisible on the 4-hour chart, then on the M15 timeframe you can clearly see the rebounds and try to enter the market.

In general, everything is clear:

Trading against the trend is trading against the main market movement based on the analysis of technical indicators, overbought-oversold currency and correction.

Indicators for trading against the trend

Perhaps the most common indicators for trend analysis and correction are:

• Moving Average— the trend indicator that I wrote about
• RSI (relative strength index)— determines the strength of the trend and the possibility of its change. Also, its readings show overbought-oversold conditions. Many strategies are based on the RSI indicator, such as this one...
• Some people use indicators MACD, Parabolic SAR, Bollinger Bands and others...

For my part, I can say that in order to determine the trend and when to trade against the trend, indicators may not even be needed! Although, if you find it easier with them, then RSI will, of course, help you best.

Support and resistance lines are also indicators, and personally, I focus my trading mainly only on them.

It is important to understand that support and resistance lines are established at extremes (highs) of prices for a certain period of time. The larger the timeframe, the stronger the lines. More precisely, it is more difficult for the price to break through them.

Have you probably noticed that the price often returns to the same place? This means there is a strong level in this place! And a trader can take advantage of this to make money. Whether trading against the trend or continuing...

Separately, it should be noted that trading against the trend is most dangerous when you trade Forex! When trading binary options risks are determined only by your one-time investment, and on Forex, open orders can lead to a complete loss of the deposit.

If you look at the screen above again, you will notice that I have two red lines - support and resistance:

1. Support – set at 64.4528;
2. Resistance is at 64.9020.

It was based on these levels that I traded against the trend. How did I do it?

• Support level placed under the price, as if supporting it and preventing it from falling lower;
• Resistance level is placed above the price, again, as if resisting the price, not allowing it to rise even higher.

If the price breaks through a line, it changes to the opposite one. That is, if the resistance line breaks through, it becomes a support line until the price breaks through it again.

But, if the levels are strong enough, then the price seems to rush between them. You can clearly see this in the screenshot below...

The usual rule for trading from lines is to enter the market if the second candle opens with the same color (in the direction where we are going to trade):

It may seem difficult at first, but with a little practice you will easily navigate and understand what needs to be done. I have been trading using lines for a long time.

How much can you earn by trading against the trend?

I’ll just show you what you can earn if you take advantage of the situation in time. I started trading when my account was $290:

finished when it was $365:

Moreover, there was a rebound from the support line and I entered the call with two more options. But that's another story :)

Part #1: THEORY

Today I will tell you how trade binary options, using the strategy " Against the trend" More recently, I published a similar Trading Strategy “Following the Trend”. You can familiarize yourself with it and understand what a trend is, how to analyze the movement of an asset’s value, and most importantly, how to make money from it.

Both strategies are easy to implement and profitable. You just have to figure out in which cases to trade “With the trend” and in which “Against the trend”.

Trade « By trend» is profitable when the trend is obvious, it is strongly expressed on the chart. Price fluctuations are stable within a certain range, and its upper and lower boundaries are close to each other.

Trade « Against the trend» is beneficial when the trend is not very pronounced. The price of the asset also fluctuates within a certain range, but its boundaries are located at a distance from each other.

There is such a thing as a “reversal”, that is, after a long or sharp upward movement (for example, after the release of news on the economic calendar), the value of an asset changes direction and begins to move downward. Or vice versa. Therefore, during an uptrend, it is necessary to catch the highest possible point and put it down. And in a downward trend, catch the maximum low point(as they say “bottom”) and put it up.

On the chart you can see that after a sharp drop down, the price of Apple shares turned around and began to grow. After waiting for the lowest possible point, we open a bullish option and then calculate the profit.

Part #2: PRACTICE

1) open my broker’s platform uTrader ;

2) I open available assets one by one and see where there were significant jumps up or drops down relative to the general trend;

3) this is what caught my eye. Significant growth of USD against RUB in a fairly short period of time. I know from experience that if it rises so sharply, the trend may soon reverse and go down;

4) I opened the Live Graph to check the information. I selected the currency pair I was interested in and turned on the Linear Regression indicator. I chose 15-minute candles.

The screenshot shows that the general trend in the value of the asset is downward. And after significant growth, the trend will still go down. Therefore, without hesitation, I opened a downside option for the near future, which was offered by the broker.

And after 30 minutes I received $72 net profit from one transaction.

This strategy is best used on options. no more than 30 minutes. And try to open trades in the direction of the general trend of the price channel. And the indicator will help you determine it Linear Regression. To make your forecast as accurate as possible, I advise you to combine this strategy with the Pivot Points Trading Strategy and the Trading Signals Trading Strategy.

You can find other strategies I recommend in the article Binary options trading strategies (full list). For those interested there are

Experienced traders unanimously advise trading exclusively along the trend, prohibiting even thinking about going against it. To explain this idea, colorful allegories are usually used to explain the dangers of this style of trading. The most famous of them are “Catching a falling knife”, “Standing against the locomotive”, etc. But traders, especially beginners, still practice trading against the trend, since it often seems to them that the price of a particular asset has already risen very much or fell, which means a reversal is ripe.

Because of such thoughts, many never became good Forex traders, as they lost considerable deposits in an attempt to catch the bottom or top. Below we will discuss all the aspects regarding how to trade against the trend correctly and when it is strictly prohibited to do so.

Psychological trap in analysis

A trader who looks at a chart usually sees the Forex price making reversals at the peaks, and then going back for a long time. This is tempting and there is a desire to catch such a reversal and enter a new trend at the very beginning of its inception, which theoretically should bring huge profits.

But when a trader looks at a chart with beautiful reversals, he usually misses one small, but very important detail. Before a trend change actually occurs, price action can break a lot of reversal patterns, causing serious losses. Losses may be due to the fact that the trader will try to catch every reversal, or even worse, enter a trade without a stop loss, counting on a quick trend change.

An example of a dangerous entry against the trend

To clarify the idea expressed, it is enough to look at a simple example. Below is the USD/CAD chart, where the upward trend and the pin bar formed at its top are clearly visible - a strong Price Action reversal pattern.

It would seem that the price is at its maximum, a pin bar has formed, which means it’s time to sell and take a new one continuous movement. But if a Forex trader did this, then the following unpleasant outcome awaited him.

But after the stop was caught, which according to the rules of the pattern would have been almost 100 points, the price moved up a little more and again drew a pin bar. It seems that now it’s definitely time to sell. However, the result of opening a short position will again be a stop loss.

That is, an attempt to predict that the price has already risen very much, which means it’s time to turn around, would lead to significant losses. If we remember that many traders increase their risks, believing that the Forex price simply does not have the right to grow further, then the result will be not just a few caught stops, but, most likely, a complete loss of the deposit.

How to enter against the current trend correctly

Understanding now how dangerous it is to stand against the locomotive, you can consider the rules of trading against the trend, which will help you find good points with minimal risks.

The first thing that is important to pay attention to is the size of the candles preceding the reversal. It is desirable that they be very long and stand out from others.

The second thing to consider is whether there is a free place. When there are nearby candles to the left of the intended entry point, the trader is dealing with a corridor or price channel, and not with a trend.

Third, it is desirable that the price forms a double top or hits a horizontal level, which increases the likelihood of a reversal.

Looking for additional signs

In order for trading against the trend to be carried out more or less successfully on Forex, you need to learn to look for additional signs. For example, a good additional condition would be levels. If they are not visible on the current timeframe, then for a deeper understanding of the situation, it is worth switching to a higher time interval.

For example, here is a daily chart, the price has formed some kind of peak, but there is no level here.

The situation is unclear, and therefore you need to switch to a higher timeframe and see what is happening there. Having opened W1, the trader sees that there is no support in the form of a level, and the global trend is directed upward, so entering here is extremely dangerous.

Such patterns, according to statistics, should be ignored, since they will bring more losses than profits.

When and how to open a position

If there is a good pattern and additional conditions that increase the chance of successful trading against the trend on Forex, then you need to be able to choose the right entry point. It is best to wait until the quotes stop near a certain mark at least 2 times, forming a certain level. To determine it, you can even switch to a smaller timeframe. Below in the screenshot you can see how three candles at once with their upper shadows hit a certain level.

The formation of such a level indicates the presence of a major player, so the likelihood of a reversal or at least a long-term correction in Forex increases. Well, of course, it is best to enter the market here, using a pending order, which is placed not far from the level, and the stop is hidden behind it.

If the level is broken, then the stop will be minimal, but if it holds, then, most likely, a good downward movement will follow.

How to determine entry potential

When trading against a trend in Forex, it is extremely difficult to determine the target, since the trader can never be sure whether he is dealing with a new trend or a correction from an old one. In such cases, it is optimal to set the goal at the nearest level. In the example considered, a trade against an uptrend with a take profit at the nearest support level brought profit in a ratio of 1:4 to the size of the stop loss.

How to work intraday correctly

If trading against the trend is carried out intraday, then the opening or closing level of yesterday can be used as a level. In this case, it is necessary to take into account the levels at daily charts, and use the average price movement as a target, that is, its usual course within the trading day. In this case, having seen that the price has already passed 90 out of 100 possible, it is better to refrain from entering a trade in the same direction, since there will no longer be any potential for movement in it.

In order to always know the current daily range, you can use the ART indicator or information from the web resource forexticket.ru. Having visited it, you need to open the section dedicated to Forex and find the section with volatility there.

Here you need to select the desired financial asset and look at its current volatility indicator for any period starting from 1 minute.

The greatest value is the daily price range. Moreover, it is important to take into account that it depends on the day of the week.

Knowing now how to determine the potential when trading against the trend intraday in Forex, we can consider several examples of good entries.

Examples of working against the main trend

Example No. 1

Below in the screenshot you can see how on the 4-hour chart the price began to fall rapidly, and then formed a pin bar based on the level. Good opportunity enter against the trend and set the target at the nearest level, which is what was done.

However, the price did not reach the level, turned around and went down again. If you trade classically, then such a transaction would bring a stop, but on Forex, cautious traders act differently. As soon as a candle with a long shadow has formed against an open position, slightly below the target level, the transaction must be immediately liquidated at current prices.

You need to understand that the price is ready at any moment to continue the trend movement, which is easier for it than against the current trend. Therefore, there is no need to persist in achieving the goal, but rather exercise caution, which requires that candles with long shadows be taken into account.

Example No. 2

If a candle with a very long tail has formed against the main trend, as in the screenshot below, then you can safely enter into a trade.

Such long tails, especially on daily timeframes, are a clear sign that one of the parties has gained the upper hand, which means that the impulse is highly likely to be strong and long-lasting.

When opening a position in such a situation, you can hold it not until the nearest level, but at least until the next one. It is important to understand that in similar situations everyone enters the market, due to which a good movement is formed, but do not forget to be careful even in such sure-fire situations, so a protective stop loss should always be in place, and it should be placed beyond the edge of the upper shadow.

It is easy to notice that the stop loss distance is too large, but setting it closer is categorically not recommended, since after the formation of such candles on Forex you can often see chaotic movements with strong multidirectional impulses, which with a high degree of probability will knock out a close stop loss. Therefore, it is better to place stops just behind the top of the shadow, counting on a long movement, which, even in such a situation, will allow you to take profits in the ratio of 1:2, 1:3 and even more.

Example No. 3

In the following situation, not even one, but two at once good examples transactions against the trend. First, the price rose rapidly, forming an upward trend. At its top, the price began to consolidate, and then a candle appeared with a long tail up. Here, as discussed in the previous example, one could safely enter and place the take not at the nearest, but at the next level. Such a trade would give almost 130 points of profit.

Then the price continued to fall within the framework of a clear downward trend and stopped again, beginning to consolidate. This is a sign that either a good continuation or a trend reversal will follow. But then several candles appear in a row, the lower shadows of which rest on the same mark, forming a clearly visible level, which serves as a sufficient basis for trading against the trend. A Doji reversal pattern immediately appears, which can be used to enter by placing a pending buy order just above the formed level and setting a stop behind it.

You can see how the deferred buy limit was put into action, and then the price went up, soon making a rapid rollback, which, despite the strong impulse, failed to knock out the protective stop loss. In this situation, it would be correct to set the take profit at the nearest level, although the quotes went further. In such a cautious manner, such a trade would have generated 70 pips in profit with a stop loss of 10 pips. That is, the ratio of profit to loss was 1:7, which is quite good.

Some traders, when forming a long candle with big tail(marked with an arrow) might consider that uncertainty has appeared in the market. In relation to this, it is important to note - if there is even the slightest hint that the price is ready to move further along the trend, then you should exit immediately. But even with such an overly cautious approach to Forex trading, it would be possible to take 30 points of profit by liquidating the deal at the close of a candle with a large range.

Results of consideration of trading against the current trend

Having finished looking at how trading against the trend occurs, we can summarize by saying: beginners are, indeed, strongly recommended to refrain from entering against the current trend. Even if sometimes such transactions allow you to make a profit, in most cases they will give losses that are difficult to cover. Therefore, there is no need to take unnecessary risks when fishing for knives. It is better to wait for a pullback and then join the trend.

Experienced traders who know how to comprehensively analyze the situation on the Forex market can work against the trend, not forgetting the importance of additional conditions. If they exist, it is permissible to take pullback or reversal patterns, setting close targets and liquidating the position at the first sign that the market is ready to move further along the trend.