Summary of "The Counter Trend Trade"

Summary of “The Counter Trend Trade”

This video explains a trading strategy focusing on counter trend trades as a complement to trading with the main bias (trend). The key points revolve around understanding market structure, timeframe usage, and technical indicators to manage risk and identify entry/exit points.

Key Concepts and Methodology

Bias vs Counter Trend Trade

Bias: The primary market direction (uptrend or downtrend), identified on a 5-minute chart.
Counter Trend Trade: Trading against the bias, requiring more caution and confirmation, identified on a 15-minute chart.

Trend Following (Bias) Setup

Enter trades on a break of 5-minute structure in the direction of the bias.
Easier and safer trades (“trend is your friend”).
Stop loss and take profit levels are based on recent 5-minute structure.

Counter Trend Setup

Used when price moves against the bias.
Requires waiting for a break of 15-minute structure (high or low) confirmed by price closing below or above the 8-period EMA on the 15-minute chart.
EMA (Exponential Moving Average) on 15-minute chart acts as a dynamic support/resistance and structure filter.
Counter trend trades are riskier and more difficult but can be profitable.
Stop loss is placed at the opposite 15-minute structure level (e.g., the last high or low).
Take profit targets typically larger than stop loss (example: 25 points stop loss vs. 75 points take profit).

Price Action and Structure

Price closing “bodies” are more important than wicks for confirming breaks.
New highs and lows on the 15-minute chart define structure for counter trend setups.
Internal price swings (within the 15-minute candle) are considered part of the overall structure.
The analogy of a river flow: trading with the trend is easier; trading against it is like swimming upstream.

Trade Management

Bias trade usually the first trade of the day.
Counter trend trade often the second trade opportunity.
Multiple trades per day possible depending on market moves.
Stop loss and take profit placement are structured, not random, based on technical levels.
Alerts and alarms can help monitor 15-minute structure changes during the trading session.

Instruments & Tools Mentioned

No specific tickers, sectors, or asset classes were mentioned.
Focus is on technical analysis using:
- 5-minute and 15-minute candlestick charts.
- 8-period EMA on the 15-minute chart.
- Price action concepts (highs, lows, breaks, candle bodies vs wicks).

Key Numbers and Timelines

Stop loss example: ~25 points.
Take profit example: ~75 points (3:1 reward-to-risk ratio).
3 five-minute candles equal one 15-minute candle.
Emphasis on monitoring 15-minute structure during the first 50 minutes of the trading session.

Recommendations & Cautions

Always react to market price action, not just bias.
Counter trend trades require confirmation on a higher timeframe (15-minute).
Use EMA as a guide for structure and trade confirmation.
Stop losses must be calculated based on structure, not arbitrarily.
Understand that counter trend trades are more difficult but can lead to profitable days.
Watch previous educational content on basics of trend, structure, and candle anatomy for full comprehension.
Implied: This is a technical trading strategy, likely for intraday or short-term trading.

Disclaimers

No explicit financial advice or disclaimers were stated in the subtitles.
The content is educational, focusing on trading strategy mechanics.

Presenter

The speaker is referred to as “Neils” in the dialogue.
No other presenter names or sources were mentioned.

Summary

The video teaches how to incorporate counter trend trades into a trading strategy by using the 15-minute chart and the 8 EMA to identify structural breaks against the primary bias identified on the 5-minute chart. It emphasizes risk management through proper stop loss and take profit placement and encourages traders to adapt to market price action rather than sticking rigidly to their initial bias.