The market has been going up for three weeks straight. You are convinced it must reverse soon. You short the stock and watch it climb another 20%. You add to your short position, certain the top is near. The stock keeps rising, and your account keeps shrinking. This is what happens when you fight the trend.
What Does Fighting the Trend Mean?
Fighting the trend means trading against the prevailing market direction. If stocks are going up, you are betting they will go down. If a sector is selling off, you are buying expecting a bounce. While this can occasionally work, doing it consistently is one of the fastest ways to destroy a trading account.
The old saying: "The trend is your friend until it ends." Traders who ignore this wisdom pay a heavy price. Trends persist far longer than most people expect, and fighting them is like swimming against a powerful current.
Why Traders Fight Trends
Several psychological factors lead traders to trade against obvious trends:
- Wanting to be contrarian: It feels smart to go against the crowd
- Bargain hunting: Falling stocks seem like they are on sale
- Mean reversion bias: Assuming prices must return to some average
- Ego: Wanting to catch the exact top or bottom
- Missing the move: Feeling left behind and hoping for a reversal
- Overconfidence: Believing you know better than the market
The High Cost of Counter-Trend Trading
Let us examine what happens when you consistently fight the trend:
Fighting an Uptrend
The S&P 500 is in a clear uptrend. You believe it is overvalued and short it.
- You short at $450, targeting $420
- It rises to $460, you hold hoping for reversal
- It rises to $475, you add to your short position
- It rises to $500, you are forced to cover at a massive loss
- Total loss: 15-20% of your account on a single trade
Meanwhile, traders who simply bought and held made easy profits.
Trends Last Longer Than You Think
One of the most important lessons in trading is that trends persist longer than anyone expects:
- Bull markets can last 10+ years with minor pullbacks
- Bear markets can crush stocks 80-90% over 2-3 years
- Individual stocks in strong trends can run for months without meaningful pullbacks
- By the time a trend is obvious, it often has much further to go
Critical insight: Markets can stay irrational longer than you can stay solvent. Even if you are eventually right about a reversal, being wrong for too long will destroy your account before you can profit.
How to Identify the Trend
Before you can trade with the trend, you need to identify it. Here are simple methods:
- Moving averages: Price above the 200-day moving average = uptrend, below = downtrend
- Higher highs and higher lows: Classic uptrend structure
- Lower highs and lower lows: Classic downtrend structure
- Trend lines: Draw lines connecting swing lows in uptrends, swing highs in downtrends
- Simply look: If the chart is going from lower left to upper right, it is an uptrend
The Right Way to Trade With Trends
Once you identify a trend, here is how to trade with it profitably:
Trading With an Uptrend
Stock ABC is in a clear uptrend, making higher highs and higher lows.
- Wait for a pullback to support (the 20-day moving average, a trend line, or a previous resistance level)
- Enter long when the pullback shows signs of ending
- Set your stop below the recent swing low
- Target the previous high or higher
- Let winners run and add to winning positions
This approach has the trend working in your favor, increasing your probability of success.
When Counter-Trend Trading Might Work
There are limited situations where trading against the trend can be profitable, but they require experience and discipline:
- Extreme exhaustion: After parabolic moves with extreme volume and sentiment
- Major resistance/support: At historically significant price levels
- Divergence: When momentum indicators show weakening despite new price highs
- Quick scalps only: Taking small profits quickly, not holding for major reversals
Important: Even experienced traders who attempt counter-trend trades use tight stops and small position sizes. They know most attempts will fail and plan accordingly.
Common Excuses for Fighting Trends
Traders rationalize fighting trends with dangerous logic:
- "It's gone up too much" - There is no such thing. Stocks can go up 1000% and keep going.
- "It's overbought on the RSI" - Overbought can stay overbought for weeks or months.
- "The valuation is insane" - Markets can stay overvalued for years.
- "Everyone is bullish" - Sentiment can stay bullish through entire bull markets.
- "This time it's different" - Actually, no. Trends tend to continue.
Real Examples of Trend Fighting Disasters
History is full of traders who were destroyed by fighting trends:
- Traders who shorted Tesla in 2020 lost fortunes as it rose over 700%
- Bears who fought the 2009-2020 bull market missed one of history's greatest rallies
- Traders who bought falling oil in 2014-2015 watched it drop from $100 to $26
- Those who shorted meme stocks in 2021 faced massive short squeezes
How to Break the Counter-Trend Habit
If you recognize yourself as a trend fighter, here is how to change:
- Accept you cannot predict tops and bottoms: Nobody can consistently, and trying will cost you
- Create a trend filter: Only trade in the direction of the larger timeframe trend
- Track your trades: Review whether your trend-fighting trades were profitable
- Start with the obvious: Trade clear trends until you learn when exceptions apply
- Use a checklist: Before every trade, ask "Am I trading with or against the trend?"
The Psychology of Trend Following
Trading with trends requires a mindset shift:
- Accept that you will never buy the bottom or sell the top
- Understand that entering trends late still captures most of the move
- Recognize that being right is more important than being clever
- Embrace boring, consistent profits over exciting, risky speculation
See If You Are Fighting Trends
Pro Trader Dashboard analyzes your trading patterns and shows you whether you are trading with or against market trends. Identify costly habits and improve your directional bias.
Summary
Fighting the trend is one of the most expensive mistakes traders make. While it feels smart to be contrarian, the market does not reward stubbornness. Trends persist longer than expected, and trading against them means swimming upstream while trend followers ride the current. Learn to identify trends, trade with them, and save counter-trend plays for rare, high-probability situations with strict risk management.
Want to improve your trend analysis? Learn about moving averages or read our guide on reading stock charts.