Why 90% of beginners lose money trading against the Trend?Once my girlfriend said me:
“You just need to find the perfect point entrance and all be well.”
But every strong trader identifies the main trend first, and only then looks for an entry point.
The trend determines:
1)where smart money is buying,
2)where the market is in a growth phase,
3)and where the probability of a successful trade is higher.
Beginners usually do the opposite: trying to catch reversals, shorting strong markets, buying falling assets because they look “very cheap.” As a result, they trade against the flow of capital and become “exit liquidity”. But she is day trader anyway…
What is trend for investment?
A trend is the direction of the market.
There are only 3 market conditions:
1. Uptrend - the market makes higher highs, higher lows.
2. Downtrend- the market keeps making lower lows.
3. Sideways (range) - price moves without a clear direction.
The SPREADEX:SPX is one of the best examples of trend analysis.
If you look at the index over the last decades: crashes were temporary, corrections eventually ended, and the long-term trend remained bullish.
That’s why investors who: bought with the trend, held positions, avoided panic selling -usually outperformed those trying to constantly predict tops and bottoms
The Biggest beginner mistake
A beginner sees: “the market went too high,” RSI is overbought, “it has to crash soon.”
Then they start shorting a strong uptrend.
But strong markets can stay overbought for months or years!
This is especially visible on the S&P 500: after breaking new highs, the market often continued climbing, while most traders kept waiting for a crash too early.
How beginners can identify the Trend?
You do not need to overcomplicate it. Most profitable systems are built around a few simple principles.
1. Price Above the 200 MA
One of the most popular trend filters.
If price is above the 200-day moving average thats mean that the market is considered strong, and long-term trend is bullish. BUT If price is below it the market is weaker, risk becomes higher. Many trend-following systems are based on this exact principle.
2. The Market Keeps Making New Highs
If the market keeps printing new highs and pullbacks get bought quickly - buyers are controlling the move!
3. Never Trade Against the Higher Timeframe
One of the most common mistakes:
on the 5-minute chart a trader sees a drop, but on the daily chart the market is in a powerful uptrend. As a result, they short a normal correction inside a larger bullish trend.
That’s why first analyze the Weekly and Daily charts, then move to smaller timeframes i tell about it in last post it Tradingview.
A simple strategy to start for Beginners:
Using the S&P 500 as an example Conditions:
1)price above the 200 MA,
2)50 MA above the 200 MA,
3)the market keeps making new highs.
Wait for a pullback into support.
For example: 20 MA, 50 MA or a previous breakout level.
What NOT To Do:
1)don’t short a strong uptrend,
2)don’t buy during panic without confirmation,
3)don’t try to predict the exact top.
Trend Following Works because markets are driven by: hedge funds, pension funds, institutional capital, ETFs. Large capital does not buy for “five minutes” they buy for months or years.
When a real trend starts: money flows in for months, corrections get bought aggressively, and the move lasts longer than most people expect. This is exactly what we see now in sleep indices Sp500 and NASDAQ:QQQ
Research on trend-following strategies also shows that trend systems have historically worked across different markets over long periods of time. But we also see how any force majeure in the world can sharply collapse markets, whether it's a war or a virus, so stop losses are essential in trading. In investments, you can keep free cash to buy back index drawdowns in 2026.
The most important rule of profitable trading: you do not need to be first - you need to move WITH the market.
Most money is made: not by predicting reversals, but by holding strong trends.
Beginners think success means: “buying the absolute bottom.”
Professionals often do the opposite: wait for confirmation, enter with the trend, and let profits run.
TOTALLY:
If you are a beginner, stop trying to predict the market.
Instead, learn to answer one simple question: who controls the market right now: buyers or sellers?
As long as you trade with the trend the probability of successful trades becomes higher, emotional mistakes become smaller, and the market starts working for you instead of against you.
The most important thing for beginners:
Money is made in strong trends. “Buy the dip” works ONLY in strong trends.
More educational posts about investing on my channels/ Good Luck!
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