The ideas of trend following and contrarian strategies are both meaningless

If the direction is not established, counter-trend trading is effective

If the direction is established, trend-following trading is effective

A discussion about direction change, and nothing more

Therefore, when the direction is clear, it becomes all about targeting small losses in the correct direction with a single shot

Direction not established → direction established → it doesn’t keep heading in that direction

In this decline, stop-losses wander horizontally

Direction not established → counter-trend traders profit

Direction established → trend-following traders are in profit with unrealized gains

If it doesn’t head in the direction, trend-followers take losses and counter-trend traders profit

If it moves in the direction, trend-followers make huge unrealized profits

Direction not established = range

Direction established = trend

If it doesn’t head in the direction = small trend, medium range

If it heads in the direction = medium trend, large trend

This flow covers the market

In trends and ranges

There are only occurrences of short-term, mid-term, and long-term

We cannot know that movement; if possible, it would be all profit, right?

Counter-trend traders profit in a small range

A small trend arrives, and without heading in a direction, it ends up in a mid-range, so counter-trend traders profit again

That’s all there is to it

Reasons to adopt a direction-change logic

The logic of being trend-following or counter-trend is too simplistic; there is no clear basis for an edge

Because the market undergoes frequent direction changes

First profit comes from counter-trend, then finally trend-following profits

Both reach ±0

When doing fractal trading

It becomes a reverse-trend in the opposite direction of the top

When it becomes a mid-trend, this logic becomes worthless

Therefore

A direction-change logic is the most effective

In a small trend, the short-term chart works

In a mid-term trend, the mid-term chart works

In a large trend, the long-term chart works

If it’s a mid-term trend but you analyze the long-term chart, unrealized gains will shrink significantly before taking profits

Profit-taking at a small trend position is meaningless

Because it is not as effective as a small-range trade

Profit-taking positions are

In the mid-trend and large-trend ranges

In mid-trend cases, take profits at temporary highs and lows

In large-trend cases, take profits at direction changes

In the case of counter-trend trading

Profit can be made only in small and mid ranges

In other words

The profit-taking positions in the positive and negative directions are absolutely opposite

There is no logic that should involve placing a stop loss

Stop loss is simply about leaving it to a machine to cut losses

If loss cutting becomes manual, it is not acceptable

In a opposite-direction logic

A zigzag range trade → retracing → averaging down at the mid-range

This is how it goes

If it retraces further, it becomes a large range

Unrealized losses keep increasing

The optimal stop-loss location is

In the mid-range

Mid-range means

While a small trend is occurring

Whether it evolves into a mid-term trend

Opposite-direction logic tends to fail

There should always be a positive-direction logic

Because eventually it will head toward the positive direction

Consider which side is currently positive

In a range market, the opposite direction is the positive direction

And in a trending market, the positive direction remains the positive direction

The best thing is simply which way it is heading now

With a positive-direction logic, in range markets, keep going in the positive direction and counter-trade

Profit-taking occurs in small ranges and mid-trends

In a large-trend, the probability of success is low

Entering with a single shot and increasing positions only increases risk

Increasing positions is for mid-trend profit-taking, aiming for temporary highs and lows

A temporary high/low means

Outside fractals and envelopes, there is nothing else reliably predictable

MA is at the 50 level for an oscillator, so it’s hard to gauge

Envelopes are at levels like 60 or 40 for oscillator, and

Understanding the market environment is part of the analysis

Fractals are only support/resistance

Other market conditions are simply to gauge the strength of the MA’s average price via envelopes

The average market value should be just one; having multiples is noise

How much the market can move

Even if the market forms in a way that fractals do not function

In the end, a market where fractals function will be established

Because Dow Theory is equivalent to “it always appears”

Ultimately, Dow Theory being valid means fractals function

By watching the average market value and understanding the current direction descriptively

Take a Dow Theory-based trade through fractals

That, I believe, is true market analysis and technical analysis

“Noise is natural,” but “Dow Theory is valid,”

Therefore, fractal and envelope market analysis are exceptionally effective in technical analysis

Market analysis exists simply to recognize what the positive direction is

If the market is not absolute, reinforcing a correct-direction recognition is what turns into profit

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