Importance of catching a trend early

[eegozi]

Didn't mean to convey my thoughts in an improper manner, although if you found that rude, you in for a difficult time on this board. Apologies nonetheless.

Apology accepted. No worries...I can hold my own....FLAME SUIT ON!

 

[enragedcow]

I assume all traders who use a trend following model have a criteria or rule that tells them when a market has entered an uptrend or downtrend. How important is it to catch a trend early.

With 24 hour markets quite often when I get behind my desk in the morning there are already some established overnight trends in the markets that I trade (I use 2 minute intraday bar charts) Now this is what happens
If I jump in the trend quite often it seems that I have entered the market at the end of the trend.

Some times I refuse to jump in and the trend continues for what is a very worthwhile move.

So the dilemma, do you jump in a trend even if it has been established for a while or if you have missed the beginning just leave it??

I jump in when I see it and if my stop gets hit I'm out

Getting in at the start of a trend shouldn't be important, if you ensure your losses are kept small and focus on trading the profit will take care of itself.


I know how you feel though, when i started trading I'd miss like 4 - 5 pips of a trend then be like "oh, the trend's going to end soon anyway no profit left there" serious idiot thing to say because I then witnessed 20 - 30 pip movements of the trend.

 

[NVP]

LOL,...seriously?

If 3 timeframes ALL confirm a trend in a particular direction you have a greater than 50% probability in my opinion that the trend will continue. I have had great success at doing this. Catching it early is hard but it can be done. What casino gives you 50% chance of a win?

Just to show you what I mean,...here are the charts of INDU at 10 min and 60 min. Match this up with the chart from the 1 min time frame I posted earlier. You will see that ALL 3 MATCHED with a EMA 5,39 crossover at the 12:00 pm hour on 9-14. What signal you use to get out is another discussion entirely. But this is simple to show that multiple timeframes augment the results of the others. Longer ones should coincide with the shorter to the trade or add to positions. I have never seen a casino tell me what cards were likely to be delt next,...but as far as I am concerned this method is the closest thing.

Good Luck

but if all 3 TF's are indicating a trend is it conversely not time to get out ?...the party will soon be over on the lowest TF :whistling

N

 

[eegozi]

but if all 3 TF's are indicating a trend is it conversely not time to get out ?...the party will soon be over on the lowest TF :whistling

N

Not at all. Look how may times all 3 TF's aligned over the last year. This has been a year long plus trend on the weekly chart. So which TF you follow to determine the "end" of the trend is up to you and how much pofit you are willing to give back and stop placement, money management, etc. So the setup is only part of it. That was why I said the exit is a discussion for another thread. As for the "party will soon be over"...also untrue. Look at the potential profit on this year long plus trend if you had followed the weekly trend. As we all know there are many shortterm uptrends and down trends (60 min trends) within an intermediate trend (daily trends) and likewise many intermediateterm up and down trends(daily trends) within a longerterm trend (weekly). So "end" of the trend is different for each TF you use.

Briefly on stops and how I manage this trade....There are many different ways to exit this trade like chandelier ATR type of stops, % profit retracement stops, trend line break, EMA crosses, etc. Again stops and "ends" of a trend are largely based on your money management rules. (The same stops as in any other method). Your money management rules will largely dictate you profits with this or any other method in trading....NOT THE SETUP! If you do not allow this trend to run its course and stay in as long as possible you could end up with smaller wins of 1-2R and never reap the benefit of 4-50R wins. Money management and TRADE management rules are key! You dont want a situation where you are right about a trend and STILL lose money because you have many 1R losses as your stops are hit before a profit and only a few 0.5R or so wins because you cut your profit short and didnt let it run the course (the old adage "let profits run"). If you do that you will make very little money and expectancy of the system will be low. This entry method is a higher probability trade method..at least in my hands. The expectancy is largely up to how you manage money.

So how do I detemine the "end" of the trend? I still favor a type of EMA cross stops. I typically start out with a tight exit of EMA 5,13 cross down (instead of the 5,39) on the lower timeframe until I have made about 2R-4R on the trade. Then I widen it to allow more room for give back of profits. Once I "lock in" a profit at 2R+ I keep my stop at that level until I can move it up again based on a EMA 5,39 cross. If I am lucky enough to have it get even bigger I widen to EMA 13,39 cross. If it goes parabolic (like a recent trade I had in gold) I actually TIGHTEN stops to EMA 5,13 to preserve this great profit. At some point you could potentially have a large profit and willing to move up to the EMA 5,13 crossover on the next higher TF. There are MANY ways to manage them. You have to figue out what methods work for you.

I hope that helps.

Good Luck.

 

[rathcoole_exile]

OMF,
if you're serious about Trend trading then I suggest you study Ichimoku Kinko Hyo ....

 

[eegozi]

Has anyone tried Euro Daily Trader from theforexclub.eu?

You have 3 posts you made asking the same thing.

I have,...they suck. The President of the company was just arrested for embezzling and child pornography. They closed everyones acct and stole their money.