Taking the Opposite Trade

It's well known that most retail traders don't make money in Forex. Very simply put, the market goes in the other direction to your intended trade & it's happened to me many times! Has anybody in this forum done a controlled study where the other side of the intended trade is taken? So if you fancy a long position just go short instead. If so it would be interesting to see the results.
(Please don't start a discussion about hedging as it is a different strategy.)

If you are taking the opposite position to that which your strategy indicates, your strategy is not working and you have become a gambler.

I agree. It was a bit of a tongue-in-cheek question because when we all start out as newbie's this is what happens in reality i.e we go short with all good intent and the market goes the other way.

I thank you your advice are very useful.

As long as you respect the money management rules you can enter the trade even based on which side the coin flips

valentine posted:
As long as you respect the money management rules you can enter the trade even based on which side the coin flips

 I'd have to disagree. One of the most misinterpreted lingo in forex is 'Money management'. Many individual factors make up this lingo. Yet, in no way shape or form is ones 'entry' factored in. I've noticed that most traders, assume their entry is the perfect one. Which leads to trade bias once the position goes against us. Here is a prime example. Most of us trade eur/usd.... EUR/USD has a daily trading range of about 80 pips. Most of the people with 'GREAT MONEY MANAGEMENT' have a stop loss of around 200-300 points. Almost 3x eur/usd daily range. How could one manage money efficiently when it is a fact that the longer you HOLD position, the more likely you are to close it at a loss.

  The word gamble isn't defined by the amount of money you wager, or the risk you take. It is merely defined as 'Taking a risk in something which we don't know for sure what the outcome would be' Many of us use high tf to enter a position. When we should use the lower tf to enter. Which is why 95% of us end up depositing before we ever withdraw.

   To answer the thread starters question. I reverse trade. I believe once you enter a position. If that position goes against you 5 points, you should not allow that position to continue to run. Of course it depends on the system which you use to enter. If it may be pivot trading trading, MA high/low etc. I currently don't have an account right now big enough to test the method for public display. Yet, with the account which I've attached here. I focus solely on my entry. Where as a sl of 6 is more then enough. I for one believe if you reverse trade you will be come way more successful then you would if you trade with bias.

Hi,

This topic is very interesting.

You are talking about the SSI (Speculative Sentiment Index). We have a good exemple here:
https://www.myfxbook.com/forex-charts/GBPUSD,W1/4563

I mentioned at that time that 81% traders were LONG, so we could guess that GBP would collapse more. And after a week, we had the confirmation, GBP lost 400 pips.

The SSI is probably one of the greatest tool / indicator that we have.

To reply to the first question... I'm actually testing it since a couple of day. I have a real account connected (kind of EA) to a demo account that trades the opposite of my trades. As I'm loosing, if my real account does the opposite of what I trade in demo... well I should be a winner. The only tricking thing is a newbie cobaye should trade on that demo account because as I'm aware of the reverse strategy, well I trade the opposite of what I think on demo so it does what I want in real account.

Taking the opposite trade is the 'BEST WAY TO TRADE'. For one simple reason. No indicator, or forex guru can predict the price action which is to come. So all though your system or someones recommendation may work at first. Playing the reversal simply means your going with the price action. Not against it. No one in there right mind would take a position in which they 'KNEW' they would end up being in red 50 points before they made 50 points. If one honestly believes that then they should take the opposite trade. Especially when your in profit and your BE gets hit. I do it all of the time, and it has led to my account doubling :)

We were talking about trading... not scalping 5 pips.
If you do scalping in a volatile moment... whatever you open long or short it will works anyway

Scalping is a form of TRADING. Regardless if your swing or scalping. You simply have to look at your entries. Take the avg amount of points in which you enter in red maybe 10 pips before you win 10 pips. Even if it is a 100 pip tp. The reality is most of us are trying to earn the most pips we can. So why not take the reverse trade and gather points instead of being bias towards the first position?

you mean Trading at the TIP of the mountain?

sd59 posted:
I agree. It was a bit of a tongue-in-cheek question because when we all start out as newbie's this is what happens in reality i.e we go short with all good intent and the market goes the other way.

I know! At one point I thought my broker had me selected for special treatment. Prices are moving up, I buy, and immediately prices begin to move down. So then I would sell, and guess what? Yep, prices would move up!

There is much mention of money management within the various forums, and much lip service. At least this thread has stimulated discussion and input, and has highlighted how little knowledge we possess.

myfxpt posted:

sd59 posted:
I agree. It was a bit of a tongue-in-cheek question because when we all start out as newbie's this is what happens in reality i.e we go short with all good intent and the market goes the other way.

I know! At one point I thought my broker had me selected for special treatment. Prices are moving up, I buy, and immediately prices begin to move down. So then I would sell, and guess what? Yep, prices would move up!

There is much mention of money management within the various forums, and much lip service. At least this thread has stimulated discussion and input, and has highlighted how little knowledge we possess.

 Yet that is just it. You have to be able to identify key zones which would suggest if you should take the reverse trade or not. Almost 100% of the times the first trade will result in your sl being hit first. Yet, if you can be selective on your entry, you should be able to fail the first trade with very low cost, and bank big on the reversal. One should never get in on a breakout. Always while the market is in accumulation or if a key resistance/support has been RETESTED to be broken.

Some good discussion here guys. BellaVista is correct in that price will retest previous levels a very high percentage of the time. No matter how diligent you have been in your technical analysis in setting up a trade price, will typically retrace between 10 - 20 pips to go back the other way and retest a previous level. This is why you should never get in a trade with your maximum position size..because it could keep going in the other direction! However, this also presents an opportunity in taking the opposite direction for a scalping trade. Experienced long term traders will not be too bothered about a small opposite movement like this because they are going for big pips but nevertheless if it happens >90% of the time why not take advantage of it?

sd59 posted:
Some good discussion here guys. BellaVista is correct in that price will retest previous levels a very high percentage of the time. No matter how diligent you have been in your technical analysis in setting up a trade price, will typically retrace between 10 - 20 pips to go back the other way and retest a previous level. This is why you should never get in a trade with your maximum position size..because it could keep going in the other direction! However, this also presents an opportunity in taking the opposite direction for a scalping trade. Experienced long term traders will not be too bothered about a small opposite movement like this because they are going for big pips but nevertheless if it happens >90% of the time why not take advantage of it?

 Very sell sad. Well looking at my trades today. You will see that taking the reverse trades actually does work. I have done it all week, and look at the results it has given me.

Buy time & make a market yourself. Both sides of the trade will be in the money at some point in time throughout the life cycle of the trade.

PayPip posted:
Buy time & make a market yourself. Both sides of the trade will be in the money at some point in time throughout the life cycle of the trade.

 Yet, why would one want to wait months just to Break even or turn profit. Those who bought eur/usd above 1.40 2 years ago have locked there money for who knows how long. That isn't smart money.

If your trading against your loss (making a market) and continuing to lower your cost basis there is no reason to wait for that to come back all the way to 1.40. Markets are cyclical no ?

It's called non directional trading. I don't give a shit what way the market goes I'm going to make money. Cause after all I'm right about 50% of the time :-)

I'll give an example,

I've been long USD/CHF since Nov 14 th @ .9456 Yep sold the top. A case of genius failed 😉. Top is subjective term based on ones time frame, meaningless really. For those that don't use charts... they don't see tops or bottoms 😁

Anyhow I've faded that move lowering my cost basis to .9240

I've been able to do this because

1) risk was small
2) I've been trading against that position the whole time.

I've traded against that position using USD/DKK and EUR/USD

Long story short I was in profit long before .9240 even though that position was 1000's of pips against me every uptick is now profit.

No stop losses were injured during this trade 🙄