How to avoid losses on counter trend trades

Most of the time the desire to pick a top or a bottom is an exercise in proving how smart we are.

Bragging rights, or whatever. I’m not immune to it either, deep down I’m an enormous 5 year old and prone to all kinds of childish nonsense.

There exists a part of all of us which would rather be right than make money. An idiotic, stupid part, but nearly everyone has it.

Today I’d like to show you how to avoid the worst of that pain, and some ways to implement it in your trading systems.

Principle: Decreasing volatility trending moves are DIFFERENT

Take a look at Crude Oil right now

Crude has painted 5 consecutive losing trades in a row, while the volatility is decreasing.

This is no accident, in fact it is one of the most consistent edges in all of finance.

Counter trend setups in decreasing volatility markets look PERFECT, but hardly ever work.

In fact this phenomenon is visible on all timeframes, from 5 minute to monthly.

If you have struggled to understand why classical charting hasn’t worked for the bears in 10 years or so… that’s it.

Anyway… avoiding losing trades is good, but taking winning trades instead is even better.

I’ll show you how to build systems taking advantage of this tomorrow.

Also, I made a video with some thoughts on the major markets for tomorrow.

If you want to understand those losing setups in the chart above you should check out the Price Action Masterclass, which goes into them in exhaustive detail