Well Ive been following a simple plan. I use a 240 min chart to determine the main trend of the market. When the trend is up I make an effort to buy higher lows or/and support areas, sometimes I'm off by a bit as Im no trading God but good enough to take heat at a lesser value than the reward I usually achieve. When the trend is down I make an effort to short the lower highs and/or resistance points and start covering when we make lower lows. When there is no trend I wait for one to develop. When the trend changes I take my acceptable loss and wait for new trend confirmation. I avoid fast chart frames as these include too much noise/fakes. That's about it really and I've never performed better until I started doing this simple strategy. Hope it helps someone. Daniel
Here is an example of the current trend for swing traders using ES (SP 500 futures): http://img357.imageshack.us/img357/8279/240minutetu4.jpg As long as that trend continues, short the resistance area at will. And here is an example for daytraders for the present day using the same instrument: http://img379.imageshack.us/img379/944/5minutepk0.jpg Happy upcoming 4th of July to all my american brothers and sisters. Enjoy the weekend. Daniel
daniel33, I agree with you on this. I while ago i stumbled upon a similar concept that definitly improved the success of severall of my ''trend following'' strategies. but i watch the trend on the daily chart rather than a intraday chart. if on a daily chart the market is doing lower highs and lowers lows, and we are trading below the open price for the day (meaning a red candle on the daily), i will take short trades only. Simply using a 20 or 50sma on a standard timeframe (5 mins for exemple) to figure out the trend direction is not enough imo. here is an exemple. since may 19th 2008, we are in a downtrend on the snp500 futures. I detected it on mai 23rd at the close when we broke the previous swing low. Since then, all the long trades logged were just plain horrible, most of them being losers and the resulting loss quite substantial. all the shorts however were in vast majority winners, because the market was actually going down.Overall the strategy did ok, but if you add the daily trend filter to that, your results are improved by quite a lot. so tomorrow, ill take only short signals generated by my trend following strategies.
Many times the market rallies when going from a lower low to a make a lower high. These trades I will avoid. It's better odds to just wait for that lower high to form around resistance and short it. For numerous reasons but a very important one is that your stop is well protected. Basically, Im staying away from any longs until the overall trend transitions to the upside, whenever it does. It's amazing how long it took me to understand this solid but simple concept. I tend to agree about intraday, lots of randomness volatility there, unless you got some real good patience and just wait for price to get to that tasty support/resistance point coinciding with the 240 min chart. Daniel
yea its the typical newbie trap. On a bull market the day will open downwards, make all moving averages sloping down, all oscillators being below their zero line, all green/red color switching indicators will be blinking red, so all the sheeps and those who use systems ala woodie CCI will be taking shorts. and then of course you rally for the rest of the day, while on the daily it was a clear uptrend all along.
One thing that also helped my trading was to get rid of all indicators. I now just use lines and would never look back. Daniel
Great posts guys. The daily is too large a time frame for me ... and you only see it payoff when you get these strong trends ... in a trading range you're going to miss as many opportunities as you get (just want to make sure we don't adapt our strategy to the market with good 'ol hindsight analysis). But using a long-time frame for the intra-day trades sounds like a sure winner to me, the indvidual trader should spend sometime experimenting with it to determine which timeframe is the best for their unique style of trading. Best