Is the trend really your friend?

Discussion in 'Trading' started by gifropan, Jan 23, 2010.

  1. So many gurus and courses tell the novice trader "the trend is your friend" and that you should always go with the trend. I find that very often by the time you see the trend its too late and if you enter the market in the direction of the trend you loose money. Is the trend really your friend?
     
  2. Murray Ruggiero

    Murray Ruggiero ET Sponsor

    In general yes, the trend is your friend. How to best use the trend depends on what you are trading.

    Also what timeframe, long term trend , intermediate or shorter term. Based on timeframe and what you are trading most robust systems use trend in some way.
     
  3. It just means being on the "right side" of the market regardless if you trading ticks or yearly charts. Everything else is up to you and lots of hard work.
     
  4. Unless you are selling time decay (i.e: options) or collecting interest (dividends, carry trades, etc), I don't see how you can make money without being on the right side of a trend in some time frame, so I would consider the trend to always be your friend.

    Some prefer pure price action (higher highs and higher lows, etc) however I like the nice simple visual method of 2 or 3 EMAs with the period selection depending on your time frame and how sensitive you want them to be. I like a 50 and a 200 to give me the macro trend and a 10-20-30 to give me the micro trend.

    My $0.02.
     
  5. Alexis

    Alexis

    Well, trend formation is one of the (too rare) features that differenciate market price distribution from random distribution. You really should treat it as a friend...

    thx,

    Alex
     
  6. She could be, better still embrace her friendship.
     
  7. She could be, better still embrace her friendship.
     
  8. You are going to get into arguments of what defines the trend.

    Most people try to follow the trend, but most people lose money. Something to consider.
     
  9. IMO (just my 2 cents), the entry points aren't as crucial as position sizing and avoiding allowing big losing positions to become "too big". Money management is much more important than figuring out what direction the trend is.

    Some traders seem obsessed in figuring out the perfect entry point but miserably fail in the money/risk management discipline.
     
  10. that means your signal is too late, try to come up with something so you can see it earlier, that is your edge. good luck and bye bye
     
    #10     Jan 23, 2010