Hi Shootanappleoffmyhead,

First off I would like to commend you on how you are looking at the possibility of trading Forex. I think that this offers a good lesson for everyone on how to look at a market and be flexible without changing your overall belief system.

As I used to work for a forex trading firm I had the ability to see lots of retail order flow and how the individual speculator reacted around exactly the type of levels you are describing. I don't know if this is consistent with the stock market or not but I can tell you that in the forex market the large majority of individual speculators are counter trend.

Market makers in the FX market are also under no regulation so they are much freer to push the market and run stops and option barriers which as I am sure you know tend to congregate around these levels.

So in short while I have seen successful counter trend traders from my experience the most successful FX traders trade with the trend.

If you are interested in trading against the individual speculator then I would highly recommend studying FXCM's SSI Index which you can see an example of here: Speculative Short Pound Interest High As Traders Bet On The Range

They publish the positioning of all their retail order flow once a week via dailyfx.com and twice a day for free to live clients via Forex News | Forex Trading News | Currency Trading News.

I find this to be a very timely indicator as when this number goes to extremes (representing a buildup in small speculators in one direction) the market tends to break in the opposite direction. I personally use this to look for breakout opportunities but it could also be used to trade counter trend as if there is not a big buildup into a major support or resistance level in the opposite direction then this would be a good indication that the market will probably not break it.

Hope that helps. If you check it out I would be interested to know your thoughts.

Best Regards,
Dave




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Disclaimer: Trading is risky and can result in substantial financial loss. As always my posts are simply one traders opinion and should not be taken as trading advice. I am not a financial adviser so everyone please do their own analysis and take responsibility for their own trades.