Importance of catching a trend early

Discussion in 'Trading' started by gifropan, Sep 16, 2011.

  1. 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??
  2. now its definitely too late

  3. wildshoe


    well, we are traders, so we dont just have rules, we read the market...

    how strong is the trend moving at the present moment, has it slowed down? is it possible to trade 1/2 or 1/4 size to minimize risk and commission until you know the trend is underway?

    what are your indicators telling you about the strength of the trend?

    is rate of change flat or crossing zero? is price slowing down? are your oscillators getting ready to flip or do they look like theyre still with the trend?

    catching a trend early is good, if the trend is established and you dont mind riding it out and maybe eating a loss, sure jump in, but its ussually better to wait until you can feel the opportunity, and you want to pounce on it

    generally speaking if a trade seems "late" or "lackluster" it will be.
  4. it doesnt really matter where you catch it on the price map.switch to higher timeframe -2 minutes is for jerkers- and catch two adjacents at any time and anywhere on the price map.4 hours will suffice.