Is it better to use contrarian or trend-following in FX? The answer is clearly trend-following. If your goal is to make money, contrarian; if you intend to profit, trend-following.
For a long time now
In this business of FX, I’ve never seen a topic end
Probably a topic that never ends
But I’ve already settled this topic for myself
I think of it as the so-called technique-type and loop-type
Counter-trend trading can certainly make a lot of money
If the goal is to make money, counter-trend
Because counter-trend heavily implies averaging down
That is why counter-trend has good compatibility with averaging down
The more you use it, the more you can make money
However, in a trending market it is extremely weak
Because the characteristic of averaging down in counter-trend gets in the way
With that characteristic, it could “return” in any market, which is why it made money
But in a trending market, there are markets that don’t return
Even if you’re averaging down, there are markets that won’t save you
If you can’t cut losses at that time, you will of course lose
Losing then becomes quite large
This is the disadvantage of counter-trend trading
And the reason it is said to be a technique-type
Counter-trend can be used if it can be covered with stop-loss as a technique, but
In reality, many traders should use the trend-following type of trading
If you want to build wealth later, trend-following is definitely better
The market fundamentally splits into range markets and trend markets
Simply speaking
Markets that return = range markets
Markets that don’t return = trend markets
You can think of it that way
Trend-following is a style that trades in these non-returning trend markets
Because non-returning markets appear far more often
Until non-returning markets appear, the number of stop-losses will keep increasing
However, just as counter-trend averaging down ends in a loss
Conversely, trend-following in the opposing direction will
When a non-returning market appears, profits will continue to grow
As you become accustomed to this, pyramiding will also become possible
What you actually did when you were losing
If you remove the concepts of counter-trend and averaging down, it becomes even better
Because then your thinking and concepts shift entirely to trend-following
Once you adopt a trend-following mindset, in any market
“I will trend-follow only on non-returning markets and extend profits”
With that mindset, you can trade and the results will grow
If you understand this trading secret, you only need to master trend-following trading strategies
And you can accumulate a lifetime of profits solely through trend-following
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