Trading with the trend is the right thing to do, but trading against it – is that actually possible, so that the operation deserves the name trading? The simple buying when prices are down and possibly going further is not trading; it may be investing. Buying anticyclically lines of support or oversold conditions could be called trading, but it is also trading against the trend.
You may enter cheap, but the course may not change and finally you find out that investors not just buy because prices went down – they buy when prices are absolutely cheap. Just buying into the falling trend is not trading at all and it is for the reason of the lack of an absolute judgment also no investing.
There are only few cases that may make sense for trend traders of going against the trend. Generally everything that is not buying the ongoing trend, the new high, at least locally, is mixing an anticyclical trading component into the cyclical main operation. This is watering down trend trading! Even waiting for the smallest dip, to make the entry a little cheaper, or just to save the spread, may turn out do more harm than good.
The reason is that the best situation, the trend is running, the trader hits the market and is in, and the trend continues, is left out of all possible outcomes. Traders waiting for the dip, the pullback or anything else miss this best trading scenario. The average gain of the remaining scenarios is smaller or even negative. Waiting severely impacts the bottom line of your trend trading.
Waiting even more and only taking those situations where the price comes back and makes a new high will not help much. The trend is now in a worse shape than it was before and accordingly the statistical outcome for the trade is also.
As a conclusion, every anticyclical trading behavior that is added to enrich the trend trading system, has to be chosen carefully. There must be a specific reason to add it at all. Hopping on the trend and doing so by waiting for anything is no good match. In the direct sense of the words it is even impossible to combine both strategies.
So, you can’t be a trend hopper or trend hitter with waiting ambitions. As a side note, waiting may lead to procrastination, a deadly habit for traders.
In order to make a sensible trading system that combines anticyclical behavior with trend trading the only possible way to do that may be trading the trend before it is there. This is of course somewhat counterintuitive and also not the straight way to earn money in the markets. The direct and straight way is generally the best method to achieve something, especially in trend trading – a trader wants a straight trend.
So, trading the trend before it shows up is rather special. Buying randomly into a market, buying a line of support or having an indicator-based oscillator system for buying oversold situations and then hoping for a trend to evolve are ways to combine anticyclical methods into trend trading. If the trend is already there, it is best to get on it rather sooner than later. Being anticyclical then is counterproductive.
Most attempts to add a little cheapness to what you mainly want, being on the trend, is like hoping to eat the cake and still have it.