Just curious to find out what fellow trend traders think about the following: Trade with the trend - Which phase of the trend would you open your position in? Do you use retracements to initiate trades or do you use breakouts? Cut your losses fast - How fast? Do you use a multiple of ATR? Moving Average? Percentage? Support/Resistance? etc. Let your profits run - How do you determine when to take profits? Where do you jump back in if it resumes it's trend? Last one: What is you money management plan?
I guess if you've answered all of the questions above, you would have the beginnings of nice trading plan!
used to miss the initial wave, but i adjusted my strategy to catch entire move now. i enter at or near 5 sma on 1 min and 5 min. 5 min is signal, when 5 sma crosses 13 sma. 1 min is entry when 5 sma crosses 13 sma. when 13 sma is close to 20 sma, i use 20 sma instead. use a 10 cent stop or when the 5 min signals end of trend (and price falls past 13 sma on 1 min and starts using it as resistence/support in opposite direction). the only other exit signal other than the one mentioned above is when price moves too fast for time....i.e. the bollinger band is tagged. i jump into trade again if price moves back into 5 sma on 5 min and i see another trigger on the 1 min. papertrade until consistent, then 100 shares until consistent, then 200 share until consistent, etc... ad infinitum (i hope!) i don't trade lunchtime unless its a trend day.
Pardon my noobishness here, but I have a couple of questions for you. You're basically trading a MACD variant right? But instead of 12/24/9 you run a 5/13 on a 1min and 5 min chart? did I understand that correctly? The reason I ask is, right now all my trading is placed manually, but I'd like to write a system that either generates signals for me to manually place trades, or a system that is mechanical and automated. So I'm trying to learn the ins and outs of TA signals.
you are correct, i use MACD as well. it is there to better clarify the picture of the price action. my settings are 5,13,6. some things i forgot to mention: i use a 5/13/20 sma on all my charts. the 20 sma is typically only used when the 13 sma is close by, and it gives good signals for reversals when used as a pivot point. i also use the 15 min chart for direction, and that chart is also setup similarly. my bollingers are setup to include the past 13 bars, and to capture 99% of all price action, since i only want to know when price has gone too far, too fast.
I trade the trends of the daily and weekly charts and use a simple price crossing a moving average entry. Stoploss is a close back across the moving average. I use either the 20 or 40sma, depending on which one the stock looks to have responded well to. Exit is always difficult but usually results from either a reversal pattern or a trendline break. My favorite is price crossing an average following a divergence in the macd. Another favorite entry is the consolidation break. Very simple and clean.
1. I generally trade breakouts. Retracements are less reliable unless the trend is a strong one, in which case either rets or BOs will do well. 2. Stops are placed just above resistance or just below support and I try to get to breakeven as quickly as possible without choking off the move. 3. Unless it's a potential trend day, I use trendlines for stops. If for some reason the trend resumes, I use the same standards for entry as I did in the first place.
Achiever, I agree with your second post...that if you answered all the questions you would have a complete methodology. Therefore, if there is a certain aspect that you are most interested in (e.g. money and position management), email me and I will be happy to send you articles in PDF form or slides from presentation(s) related to that subject. Dave
[/B] I use a mix of short term and long term systems to fine tune my entry. My signal is volatility breakout and some indicators but I mostly enter on a retracement (I use S/R levels for my S/T trading) 2 ATR for long term, 1/2 ATR for S/T I am in as long as it takes.... It the trend stalls or changes I get out on a 10-day breakout to the opposite direction I am in. I use units to buy based on my risk percentage plus ATR's and add only to winners, I also use a portfolio of no related items only where my total units is limited in one non correlated sector.
The idea with trading with the trend is to get in before everyone knows it's a trend and get out when everyone and their dog has gotten on board.