And the Best Countertrend Signal is ...

[BillCh 10]

... well, that would be great to know!

 

If you assume one market can best be traded with a countertrend approach, what would generate your entry signals?

 

A simple RSI overbought/oversold at 70/30 or at 80/20, a simple long entry after 3 consecutive down days, or a complex combination of indicators, oscillators, market internals, phase of the moon, ...

[Soultrader 12]

Interesting as the saying dont fight the trend seems to be a rule amongst traders.

 

On the other hand, I am a countertrend trader majority of the time mainly because I seek responsive buying/selling.

 

Shaun Downey, author of Trading Time, describes responsive buying/selling as: "Long-term traders dictate the end of the trend by withdrawing initiative activity, taking profits or establishing countertrend positions. They also dictate when the reaction to a trend has been completed."

 

That being said, I use a combination of S&R with MP and volume for countertrend trades but take profits swiftly with somewhat fixed targets in mind.

[walterw 10]

Hi Bill, I use False breaks at the end of a nice move... I call them M trades, It works very nice because it has a very nice RRR on it... as you can manage very tight stops versus larger targets... cheers Walter.

[brownsfan019 17]

Candlesticks are built for counter-trend trades. See my review of a Nison book here on TL.

 

Just one piece of advice - the shorter the timeframe, the more important additional confirmations are needed in order to use candlesticks as a reversal signal. In other words, if trading a 1 minute chart, you NEED some sort of additional confirmation to take that candle signal. Candles in and of themselves are not terribly reliable on very small timeframes.