If you can spot the trend, it's probably already too late...

Discussion in 'Trading' started by cgeorgan, Apr 16, 2010.

  1. This does not apply to long-term position traders or CTA's...but to you short term traders.

    How many of you out there write dutifully in your journal, "Wait until a clear trend has developed, and get in on that."


    "Don't fight the trend?"

    Yet time and again, you wait and wait for confirmation, only to get confirmation that the trend has ended 25 ticks after you got in it.

    If you can see the trend on a short-term basis, it's probably close to being - or already - over. A few lucky ones will get the gut feeling a trend is developing and will get in; a small percentage of those will get out with profits...a few more will get out for a scratch, but most will lose money. For the rest of you, you're waiting until the trend is *obvious*, and you get your a$$es handed to you. For you, it's really just a question of how good your money management is...will you take a small loss, or a big one?

    I have my own contrarian views which I put to work. I have found in my own work that "the trend" is something that should be taking you out of a position...not something that needs to occur to give you a reason to get in a trade.

    Every turning point in the market should be a reason to get into a position. You should not care "why" the market is turning - because in reality, it doesn't matter. Maybe it's a pivot point. Perhaps resistance. Maybe some fib line. The point is, it doesn't make a difference. The market is turning, you should be in on it.

    At this point, there's a good % of your trades that you'll get stopped out on (assuming you know how to stop yourself out correctly). A few more will result in scratch profits. But it's those precious few that develop into something big - something where you're holding on to your nice chunky position and you're now scaling out, while everybody else is twiddling their thumbs waiting for their magic oscillator or "trend confirmer" to flash green.

    So many of you out there trade like a "smart bomb" - that is, I've gotta develop this hyper-expensive system that flies over a target from 50,000 feet and drops a multi-million dollar payload on a 1 square yard target. Few of you realize that mines - the simple instrument of war that is triggered simply by pressure or motion - kill far more people.

    Keep it simple. Get in as much as you can. Have the discipline to stop yourself out for the next trade. Once in a while, you'll be rewarded with the big one...

    Happy Friday!
  2. There's plenty of this garbage going around. You're saying nothing new here. You wasted the last 1/2 hour typing that up. But it's Friday. What better do you have to do?

    There are PLENTY of turning points. The problem is commissions,s slippage, and a host of other factors that causes someone not to take every damn one of them.

    The key is a quality signal.
  3. Exactly.

    PS - don't you have 0.64 more posts to make today, or did you clear your quota?
  4. Nope, made all those bad boys during my prime. Eased off a bit lately. IMO that number's probably around .35 now. :cool:

    ........Whoops, now i'm a little over. :(
  5. They dont have to fight the trend, nor do they have to be too late to the party.

    Someone astutely posted:
    "The second mouse gets the cheese"

    The attached chart shows where an analyst could have been the second, third, or fourth mouse and still got cheese.
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  6. That's correct, but now we're going after different sizes of cheese here :)
  7. No.Heat


    This attitude is precisely the kind that prevents traders from capitalizing in markets like the one we are experiencing right now, fear of buying near the current top, fear or shorting near the current bottom or greed calling reversals on well established trends.

    If you are finding it hard to profit off trend based trades I suggest you study with great care your entries.

    Trends don't reverse with ease and even when they do, the reversal process does not come without a very good battle.

    Try to use charts that matter to big money, as far as trend goes, stay away from meaningless random charts that offer nothing but illusions to newcomers thinking scalping is viable solution.

    The trend is most definitely your friend, even when it ends, just make sure you search for trends in the proper charts and not just in the wind. The only enemy in trading is yourself.
  8. Lethn


    Forget the trends, the problem I have is that the rates and charts just don't seem to let you see enough of the big picture, particularly when it comes to trading. You can see the daily high and low rates but sometimes that isn't bloody enough since it can take several days for a big price move. I think I'm beginning to get the hang of picking the high and low points but the problem is there are times when what I'm trading in shoots up like crazy or drops a ton before finally going where it was before.

    Meh, I guess I'm ranting but just something I've been annoyed with lately. I think trends are a load of bollocks unless they're long term and repeatable, what you need to be able to see in the markets is the threshold highs and lows.
  9. No Heat ... I assume you mean longer term charts rather than short term. I hope you can give me a sense of your thinking -- time, tick, volume or range magnitude.

  10. Thing is once you're in how do you tell its a trend and not a trading range? What I mean is the saying "the trend is your friend" , well yea, but you're in and its a hall of mirrors. Pullbacks
    are as varied as the winds. You don't flinch at minor ones but
    theres that bigger one that takes you out and it turns out that if you had stayed in all day that would have been the play. Its not like drawing up a flow chart that you know what you want out of the immediate future. The scenarios are like collapse of the wave function ...IT decides not you.
    #10     Apr 16, 2010