What Are Trend-Following and Counter-Trend Positions?丨2026.09.21丨System Class

A new week begins, and this week's theme is following the trend. Last week, we repeatedly used the terms "trend-following position" and "counter-trend position": judging which side is under pressure, discussing mechanism status, and reviewing capital usage all depend on them. Strictly speaking, however, we have not yet explained the definitions of these two terms separately—so as the first article of the week, let's first clarify the most basic concepts.

First, the conclusion: trend-following and counter-trend are states relative to the current market, not permanent labels. This is the core of this article and the starting point for all the topics that follow this week.

This article discusses the concepts and identification methods for trend-following and counter-trend positions. It does not represent a recommendation for ordinary users to set or modify platform parameters themselves. Strategy structures and parameters are part of the platform's preset rules. Ordinary users can simply operate with the default parameters and generally only need to adjust the initial order and leverage according to their own account conditions.

I. Definitions of the Two Terms

Trend-following position: the position side moving in the same direction as the current price. When the price rises, a long position moves with the price and is a trend-following position; when the price falls, a short position moves with the price and is a trend-following position.

Counter-trend position: the side moving in the opposite direction to the current price. When the price rises, short positions bear unrealized losses; when the price falls, long positions bear unrealized losses—the side under pressure is the counter-trend position.

Two points must be properly understood. First, "position" or "side" refers to the position's path, not a "person" or an "identity"—two paths exist in the account at the same time, and each path occupies one position during any segment of market movement. Second, the basis for judgment is the current direction of price movement—the market movement that has already occurred, not a prediction of the future.

II. Understanding the Definition: Focus on Three Keywords

Relative. Trend-following and counter-trend describe a relationship, with the current market direction as the reference. When the market direction changes, the position of the same order changes—the order itself has not moved, but its position has.

Current. Use only the direction that has already occurred for judgment. Announcing "the sides are about to switch" during a pullback in an uptrend is not judgment but prediction. The boundary between judgment and prediction is the phrase "already happened."

State. This describes a changing state: when the price rises, long positions are trend-following and short positions are counter-trend; when the direction turns downward, the two switch. A state can persist or reverse, but it is always merely a state.

III. What These Two Terms Are "Not"

First, they are not judgments about whether a strategy is good or bad. The side under pressure is not the "wrong position"—in a two-way structure, one side is always under pressure. This is a normal feature of the structure, not a malfunction.

Second, they are not predictions of the future. Being trend-following does not guarantee that the move will continue smoothly, and being counter-trend does not mean a turnaround will happen immediately. Position describes the present, not what comes next.

Third, they are not permanent labels. This is the point we most want to emphasize in this article: no position is inherently a "trend-following position." When the direction changes, the original trend-following position may become the new counter-trend position—this point will be discussed in detail later this week.

Fourth, they are not operating signals. They answer "which side is under pressure," but not "whether to add to the position or exit." Observation belongs to judgment; position sizing belongs to rules.

IV. Why Reestablish These Definitions This Week

Because everything we discuss this week starts with these two terms.

Tomorrow we will discuss "how direction is confirmed"—how price and indicators jointly provide input for the system's directional judgment. Before discussing the method of judgment, we first need a clear object of judgment; otherwise, the discussion will slip into "it feels like the market is rising."

Later, we will also discuss "why the profitable direction needs execution room" and the boundaries of the "follow-the-trend" mechanism—the subject of this mechanism is precisely the trend-following side, while the mechanism itself has trigger conditions and a multiplier cap, as well as its own switch status under the current configuration. If the definition is unclear, the mechanism may be misinterpreted as "add to the position whenever it is trend-following."

Finally, we will discuss "what to do after a reversal"—the entire subject of reversal is "what does the original trend-following position become?" Only after the definition is firmly established can this topic be properly addressed.

V. Three Steps for Quick Identification (Last Week's Method Index)

Last week we already covered the complete identification method. Here, we provide only an index so it can be revisited at any time this week.

Step one, confirm the direction of price movement: look at the path that has already occurred; this is a description, not a prediction.

Step two, compare the directions of the positions on both sides: the side moving in the same direction as the price is trend-following, and the side moving in the opposite direction is counter-trend.

Step three, identify the status of the side under pressure: top-up level, margin usage, available balance, and whether the protection mechanism has been triggered. Identifying the position is the entry point; confirming the status is the purpose.

VI. Several Easily Confused Statements

First, "a trend-following position is simply a profitable position." Usually, but not necessarily: unrealized gains and losses may be given back before an exit occurs. The positional relationship describes the relationship between path and direction, not a guarantee of profit.

Second, "a counter-trend position means the strategy has made a mistake." No. The top-ups, pullbacks, and protection mechanisms on the counter-trend side all operate according to their own rules. It is part of the two-way structure.

Third, "trend-following and counter-trend are strategy parameters." No. They are descriptions of states and belong to the observation layer; parameters are something else—the mechanism's trigger conditions and multiplier cap are written into the preset rules.

Fourth, "once you identify a trend-following position, you should do something." This does not constitute a basis for operation. The greatest use of this judgment is to allocate observation: record results on the trend-following side and record actions on the side under pressure.

VII. This Week's Roadmap

This week we will explain following the trend in full: how direction is confirmed (price and indicators), why the profitable direction needs a certain amount of execution room, the role and boundaries of the mechanism, what happens to the original trend-following position after a reversal, how it works together with anti-cascade protection, and how to confirm the mechanism's operating status from the logs.

There is only one central question on the roadmap: what exactly should trend-following be regarded as? This week's answer will unfold step by step, but the starting point is today's statement—trend-following and counter-trend are states relative to the current market, not permanent labels. They describe position, can switch, do not predict, and do not direct; only by putting them back in their proper place as observations can every topic later this week have a solid foundation.

Tomorrow we will continue with "How Price and Indicators Jointly Determine Direction," looking at what the system inputs when determining direction, what role indicators play in it, and why indicators are rule inputs rather than guarantees of the future.