It has been quite humorous seeing the conflicts going on between traders on different social media platforms this week, as people have been either a) trying to profit from the downwards move in the markets by going short, and b) those viewing the price action as a pullback and a potential buying opportunity by going long.
Friday's action saw a rally in the indices, after price had been dropping for the last couple of weeks.
As readers of this blog will know, I and other trend followers do not make predictions about what will happen. Trend following is a reactionary trading approach, therefore we wait to see what price action occurs and then we react to it.
As I made perfectly clear in this post, people may have similar styles of trading, but because of their chosen timeframes and parameters, they may well see the markets differently to people using different timeframes and parameters. Neither approach is wrong.
I saw one trader I follow getting lambasted on social media yesterday for making completely objective comments about the current markets and his trades, based on HIS timeframes, by another trader who said that the downtrend had been 'obliterated', and was basically rubbishing his approach.
Well, that approach had captured a very nice downwards trend on the indices over the last couple of weeks or so, and based on his charts and methodology I'm guessing he has made a decent profit in that time. So who is right?
There is no need for this. There will always be buyers and sellers trading in opposite directions at any time. Unless I have missed something, that is what creates a market. For traders to be quite so aggressive to others for no reason other than for reasons of satisfying their own ego is an unfortunate reality of the world we operate in.
What what its worth, my own bias this week has been to the short side, as that is what my own charts, timeframe and parameters have been indicating. Generally, one day's price action against the trend does not constitute a reversal of the trend. Price also does not tend to move in straight lines, and I'm not in the business of trying to pick tops or bottoms in price moves. If I am wrong, then so be it. That's why I don't bet the farm on any individual trade. Time will tell whether the trades I have put on this week will end up profitable or not.