{"id":58235,"date":"2016-09-18T01:27:59","date_gmt":"2016-09-18T08:27:59","guid":{"rendered":"https:\/\/brookstradingcourse.com\/?p=58235"},"modified":"2018-03-25T06:45:30","modified_gmt":"2018-03-25T13:45:30","slug":"countertrend-trading","status":"publish","type":"post","link":"https:\/\/www.brookstradingcourse.com\/es\/ask-al\/countertrend-trading\/","title":{"rendered":"Ask Al: Countertrend trading"},"content":{"rendered":"<h2>Countertrend trading wiped out winners!<br \/>\n BPA trading room Q&amp;A: June 16, 2016<\/h2>\n<p class=\"content-box-green\">Question: I bought the 14 close, okay, and took a 16-point swing but decided to keep trading and got short many, many times and wiped out significantly more than I made up to that point. Is there anything about today that was a warning against shorting near the highs?<br \/>\n <em>Video duration: 4min 56sec<\/em><\/p>\n<div style='position:relative;height:0;padding-bottom:56.25%'><iframe class='sproutvideo-player' src='\/\/videos.sproutvideo.com\/embed\/709adfbb1318e6c3f8\/5ab4e9c3a23ab016?playerTheme=dark&amp;playerColor=' style='position:absolute;width:100%;height:100%;left:0;top:0' frameborder='0' allowfullscreen><\/iframe><\/div>\n<p><\/p>\n<p class=\"caption\">You can also view this video on <a href=\"https:\/\/youtu.be\/fFiQYsj_fsA\" target=\"_blank\" rel=\"noopener\">Al&#8217;s YouTube Channel<\/a> if needed.<\/p>\n<h3>Price action shows better to buy<\/h3>\n<p><a href=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/09\/ask-al-77-countertrend-trading-wiped-out-winners.jpg\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/09\/ask-al-77-countertrend-trading-wiped-out-winners-300x228.jpg\" alt=\"Ask Al Brooks Countertrend Trading Wiped Out Winners\" width=\"300\" height=\"228\" class=\"alignleft size-medium wp-image-58240\" title=\"\" srcset=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/09\/ask-al-77-countertrend-trading-wiped-out-winners-300x228.jpg 300w, https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/09\/ask-al-77-countertrend-trading-wiped-out-winners-600x456.jpg 600w, https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/09\/ask-al-77-countertrend-trading-wiped-out-winners.jpg 767w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>Well first of all, the 16-point swing is a fabulous trade, and as far as shorting, we had these surprise bars: 24, 34, 35, 38, 39. And then here, 55, and 56, 57.\u00a0 After you\u2019ve seen one, or two, or three of them &#8212; especially 34 &#8212; I would really become cautious about selling.\u00a0 Once you have a day where you\u2019re starting to get a lot of bull bars closing on the highs &#8212; 8, 9, 12, 14, and then here [17], and then here [19]. That\u2019s warning you that there\u2019s pretty good buying pressure. 24, okay, possible two-leg trap, but then 34, 35, I think changed the nature of the day. And at that point I think it\u2019s much better to look to buy than to sell.<\/p>\n<h3>Reality check<\/h3>\n<p>However, the reality is with all traders they have an approach to trading, and it works for some things and it\u2019s bad for others.\u00a0 So as long as your wins are bigger than your losses, you\u2019re okay.\u00a0 So doing what you did is okay.\u00a0 You were fading, right?\u00a0 You were buying a bear trend and then you switched to selling a bull trend, and the bull trend went on for a long, long time. So every time you kept selling near prior highs, you kept getting killed, right? Sell on the 25 high.\u00a0<\/p>\n<h3>Logical trade management<\/h3>\n<p>Now, what you\u2019re doing probably was <a href=\"http:\/\/www.schwab.com\/public\/schwab\/active_trader\/trading_insights\/trading_strategies\/trading_behavior_emotion_vs_logic.html\" target=\"_blank\" rel=\"noopener\">logical<\/a>, so you know what I\u2019m going to say, right?\u00a0 Any time you do something logical as a trader, as long as you can follow it up with good management and wide stops, you can usually avoid a loss.\u00a0 But you have to trade small and you have to manage well.\u00a0 So let\u2019s say the market\u2019s rallying over here [B35] and you sell that close or sell that high [B25], right?\u00a0 Well, your minimum stop probably has to be at least a measured move up, right? So your stop is a little bit above there [MM top 2064]. So if you sell that close, you wait for a bear bar and you sell more here below 40, okay.\u00a0 And then you have two choices at that point: One is you decide to get out at the midpoint between your two entries or you try to get out at your first entry with a profit.\u00a0 So let\u2019s say you sell &#8212; let\u2019s do it his way &#8212; okay, so you sell with a limit order right here at the 25 high, okay, and you say, \u201cWell, that\u2019s not good. Look at that breakout,\u201d and you sell more one point below 40.\u00a0 I have to try to shrink this down. So you sell more at one tick below 40, right? So here are your two entries, short here and short here.\u00a0 And what took place here [B41], right? It tells you a lot of traders did exactly what you did and there\u2019s so many of them with limit orders to get out breakeven that they could not get filled. The ones who were patient got filled over here [B49], right, and part of the reason for this reversal probably was a lot of scale-in bears buying back their shorts, so this is probably short covering here.<\/p>\n<h3>Trade small, don\u2019t panic!<\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.brookstradingcourse.com\/wp-content\/uploads\/2016\/09\/dont-panic.png\" alt=\"Don&#039; t Panic\" width=\"208\" height=\"144\" class=\"alignleft size-full wp-image-58239\" title=\"\">And so to me, that\u2019s probably what you need to be working on: Trading small and not panicking, just trying to <a href=\"https:\/\/www.brookstradingcourse.com\/how-to-trade-manual\/trade-management\/\" target=\"_blank\">manage your trades<\/a>.\u00a0 The opposite was true over here, right?\u00a0 You had Buy The Close bulls here [B24] and some of them used a wide stop below here [B22]. Maybe all the way down to the low of the day. They waited for a decent bull bar and they bought more here [B31]. A lot of them tried to get out breakeven, which was easy to do. Others &#8212; breakeven on the entire trade &#8212; others tried to get out breakeven at that low [B25].\u00a0 But when the market started to race up past that 25 low, it tells you that it\u2019s a buy.\u00a0 So instead of bulls panicking, saying, \u201cOh my gosh, thank you for letting me out breakeven,\u201d the market was racing up.\u00a0 So to me, that\u2019s a sign that we\u2019re going higher.<\/p>\n<h3>Trade small, use wide stops, scale in.<\/h3>\n<p>So I don\u2019t know if I\u2019m making any sense, but I think the key is to trade smaller than what you think small is &#8212; so trade very small; use wide stops, and scale in.\u00a0 And if you\u2019re buying, you scale-in, buy above a bull bar.\u00a0 Make sure it\u2019s at least &#8212; I would say at least a couple scalp prices down.\u00a0 So if we\u2019re trading the Emini, a scalp is one point. If I\u2019m going to buy that close [B31] and I\u2019m looking to buy above a bull bar, I\u2019d want the bull bar to be at least a couple points below my first entry.<\/p>\n<p><em>Al Brooks<\/em><\/p>\n<p><a title=\"Al Brooks&#039; trading room\" href=\"https:\/\/www.brookstradingcourse.com\/online-day-trading-room\/\">Information on Al&#8217;s Online day trading room<\/a><\/p>\n<hr \/>\n","protected":false},"excerpt":{"rendered":"<p>Countertrend trading wiped out winners! BPA trading room Q&amp;A: June 16, 2016 Question: I bought the 14 close, okay, and took a 16-point swing but decided to keep trading and got short many, many times and wiped out significantly more than I made up to that point. Is there anything about today that was a [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[159],"tags":[],"class_list":{"0":"post-58235","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-ask-al","7":"entry","8":"has-post-thumbnail","9":"override"},"featured_image_src":null,"author_info":{"display_name":"BTC Admin","author_link":"https:\/\/www.brookstradingcourse.com\/es\/author\/richardhk\/"},"_links":{"self":[{"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/posts\/58235","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/comments?post=58235"}],"version-history":[{"count":0,"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/posts\/58235\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/media?parent=58235"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/categories?post=58235"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.brookstradingcourse.com\/es\/wp-json\/wp\/v2\/tags?post=58235"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}