Are most of your systems trend oriented in nature? Yes. So, by definition, they will never be in the right direction at market turns. Yet you, as an experienced trader, may sense when a market may be prone for a turn. In a situation like that, would you be willing to buy because of what you see as a trader even though your system is short? I would probably want to be flat, since I tend to weigh the psychological, opinion-oriented segment of trading
about equal with the technical and trend-following element.
So you want to see the market display some signs of turning around before you'll commit? What is more likely is that I will be positioned in the right direction of a trend and decide to liquidate faster
than a trend-following system would because of the intuitive factor.
What about entering a new trade counter to a prevailing trend? I've certainly done it—that is, made countertrend initiations. However, as a rule of thumb, I don't think you
should do it.
Do those type of trades do more poorly than other trades? Generally, yes, although every now and then they may give you a great story like going short sugar at 60
cents, which I did. [Sugar plummeted from a high of 66 cents in November 1974 to a relative low under 12 cents only
seven months later. Each 1 -cent move in sugar is worth $ 1,120 per contract. A large trader like Dennis will often
trade positions measured in thousands of contracts.] I've got ten stories like that. But I have to tell you, in all
honesty, I don't think the broad class of trades I have done like that have been profitable.
The short sugar trade is a great example because the market had witnessed an incredibly explosive upmove and it took a lot of courage to step in as a seller at 60 cents. But take the flip side when sugar is in a real bear market and is down to 5 cents; every trend-following system in the world is going
