Trend trading is a strategy that is very attractive. The trending patterns just pop out when you retrospectively look at stock charts. You salivate about catching a beginning trend and riding it through to its final conclusion many months down the road . The money beckons and sucess is before you !
Alas, in the real world trading is not quite so easy . You enter a trend – you may be a bit late or you get in near the trend’s beginning , but you do make it on board . You are now in the trade and you’re able to get a small profit as you see the predictions you made come true. Then you have a strong day and then the market stops dead when resistance is hit by the stock. You tell yourself that you can’t make the whole move in a day and there is more ahead and then you add to the position you are in . Then the next day the market opens , goes absolutely nowhere, and then it starts heading down fast. Because you have added to your position you are quickly back at break-even and once you have the orders in place, you have already lost money. What occured ? How could you tell before it happened that the trend wouldn’t continue and that instead you should take your profit when the market opened strongly up and paused ?
Here are some trading tips that will tell when a trend will stop and when it will continue . If you use the tips along with the technical analysis training you’ll be on top of your game.
First and most importantly : use higher time period charts to set your targets ; look for logical places of support and resistance to figure out where the market is going to stop or start moving .
If you are not sure how you can predict where support and resistance will exist in the future , or within your trading are unsure of how to coordinate your time frames , then consider using technical analysis training course for some help . You’ll find Drummond Geometry to be a top option but there are many schools of thought which are valid as well .
A tool is another element that you need with which to make judgments about the strength and robustness of a trend . Resistance or support will be broken through by a strong trend and a weak trend will stop and either go into sideways congestion at a point of resistance or support or it will reverse and move in the opposite direction . If your analysis tool kit has the right tool you can make a prediction of which action is more likely ; you’ll have to wait and see without the right tools , and you have a high possibility of getting disappointed.
To measure this appropriately you should use momentum tools and apply the tools to a timeframe smaller than that of the trend you are currently trading … basically if you are trading a daily chart , with your trades try to pick the day’s high or low, then you would be looking at an hourly or half-hour chart to give you support in your trading decisions intraday .
We will continue this discussion in part 2 of the technical analysis training series.
Author:
Peter Markham is a Forex trader with 30 years practical experience in the markets. He received his education in Sydney and Los Angeles and has been a trading consultant worldwide. He has written widely on Technical Analysis Training Course. Among the many choices Peter recommends this technical analysis training course for an original and productive trading approach.
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