Enbo Lu on Countertrend Averaging and Its Trend Risk

Summary

In this interview about an automated trading competition, Enbo Lu discusses his experience building expert advisors and the trade-offs in his approach. He describes a short-timeframe countertrend system that uses RSI to open an initial position, takes fixed-profit exits, and adds positions through averaging when price moves against the trade. The idea is to collect small gains when markets fluctuate, while accepting that strong trends can create large losses before prices recover.

Lu says the system used a balance-based loss limit in the competition and that he usually risked less on his real account. He characterizes trading as probabilistic, says no strategy wins continuously, and notes the difficulty of making automated systems adapt to changing market conditions. He also discusses attempts at multicurrency testing and the constraint that led him to narrow the competition version to two currency pairs. This is a personal account, not a controlled evaluation: the interview provides no systematic performance analysis, and averaging can amplify exposure during persistent trends.

Key ideas

• The described system opens countertrend positions using RSI and seeks fixed, relatively small profits.
• It averages into adverse price movement, which can increase exposure when a market trends strongly.
• The developer frames the strategy as more suitable for ranging conditions and acknowledges the risk of large trend-driven losses.
• The interview distinguishes a competition risk limit from the developer’s lower stated risk on a real account.
• The account offers personal experience rather than controlled evidence of profitability.

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.