Hey hey: what's up my friends, so in today's episode right i want to share with you: how do you trade counter trend, trades right safely and profitably? Okay, so before we get started, let me just explain briefly: what's the difference between counter trend and catching a falling knife, because to many of you, you might think hey right now. This is all the same thing right catching a following: nine come to trend trades, so catching a falling knife right to me right. My definition is that uh, let's say a stock right. It keeps hitting lower and lower with no n inside, so it just keeps going down going down and every time it breaks a new low, that's the all-time low.

The next day it breaks a new load, that's all-time low. Okay, on the other hand, counter trend trade right for me. The way i define it is, let's say, a stock, you know heads down, lower uh and maybe form a new all-time low. Then the next day or the next one week either huge rally.

Maybe it's a date cat, bounce or whatsoever. It has a huge rally off that all-time low right and then later the price is heading down lower again about to re-test the previous all-time low, or rather the previous swing low or the all-time low. That dts are done previously, so at that point right as it approaches that all-time low level, that could be a potential counter trend trade, because now you have a frame of reference, a point where you can refer to right to plan your trade, unlike right catching a Falling knife, where you don't have this frame of reference, be because every day the market just keep collecting lower and lower. So that's the key difference right counter trend trade.

You have a frame of reference, a reference point where you can time your entry and manage your trade, but a catching a falling knife right, that's not possible, because the market keeps collapsing day after day or in the opposite direction. It just keeps you know, rallying up higher and higher each day, all right so to trade, come to train right, first and foremost, number one. You must have a point of reference, it could be an all-time high, it could be a multi-year high, it could be a 52-week high, it could be a key support resistance area whatsoever. You must have a point of reference that you can refer to number two.

You want to see a strong power move right approaching your point of reference, so let's say photos of your trade currencies: euro dollar - maybe uh. You know it had a dip right down to an all-time low at let's say you know: 90 cents. Then you had a rally or 500 pip ready and then nice heading down lower again and approach and approaching right. The 90 cent level price point.

Okay. So when you approach that 90 cent level price point, you want that move right to be fast and furious. You don't see the candle right to be big and bearish the more barrier, the more bearish. It is right, the stronger the momentum, it is the better and why is that? Because that's going to entice short traders right to shot the breakdown when he breaks the let's say breaks below the 90 cent level, which is an all-time low right.

Many traders will get excited to show the markets right he's so bearish look at the downtrend right. Let's show this market to to nothing. So that's the the thought process of you know many traders around the world right as they look at this bearish price section on the charts and here's the thing right as a lot of traders. You know pile into this short trade right and imagine if the price breaks below that all-time low, all right and the next thing you know it does a false break.

So that's the uh. Second, the third thing we're looking for a false break, so the meaning, the price breaks below the all-time low on euro dollar and then reverse back in the open seat direction and close strongly right for the day. So at this point you can imagine right there, those traders who chase to short the breakdown they are now in the rate, because imagine you shot the lows market. Reverse 180 degree: reverse against you, you're, not in the rate you're suffering losses, and this is where a counter trend trader can step in right, because the market has signaled to you that you know it tried to break below that all-time low and fail.

Instead, what it did right is it rarely higher, so a counter trend trader can come in and step in right and go along right and this time around, it's not saying you know reckless trading, because you can use that swing load. That is just being formed right to set your stop loss. You can just set the stop loss below the swing low. So if you are wrong, if the trend continues boom right, you're out of the trade, but at least now you have a level right there, you can reference to to enter and exit your trade.

So that's why you're looking for a false break, so fourth thing we're looking for is setting a proper stop-loss and it's quite simple, really just set your stop-loss right below the swing low, because there's no reason you know stay in the trade any longer. If your swing low is uh broken because likely right, the downtrend will continue and you want to get out of the trade and the fifth thing right. The fifth and final thing is that, as a counter-trend trader, you know, let's say you enter on the false break and the all-time lows where you know it couldn't hit lower. So what you want to do is to have a conservative target.

Don't aim for, like you know like for the stars, for the moon, you know the next two three thousand pips right, because what happens right more often than not. Is that what you're going to get is a brief rally right? Maybe the market rarely is another. You know to 300 pips right exhaust itself and then collapse lower and the downtrend resumes. That's usually what happens so as a counter trend.

Trader you're, not trying to you know get. You know everything right: the entire buffet, no you're just trying to get just one small bike right and that's it and you get out of the trade okay. So this is how you go about. You know trading counter trends in the market.

You know you can apply this to currencies to cryptos et cetera right. This concept right would work right. So, as a quick recap, let me share with you what we've just discussed right number one. If you're on a trade counter trend, you must have a point of reference right, don't catch a falling knife, you must have a all-time low, a 52-week, low or multi-year highs or lows right to refer to to time your entry, you know, and your exits and your Stop-Loss, etc.

Number two right: you want to look for a strong power move into this uh point of reference. Number three look for a false break: let the price take out. Let's say you know the extreme lows all right: only to get rejected and close higher for the day right number four set a proper stop-loss right. It can go just below the low of the falls break.

Candle and number five have conservative target. Don't aim for the stars because it's unlikely you're going to catch the start of a new trend. What's likely to happen, is you get just a brief pullback, a short rally before the downtrend continues make sense. So with that said, i wish you good luck and good trading.

I will talk to you soon. You.