I am new to the world of trading and new to this forum too. I have been studying up on trend trading, because it seems like a good way to get solid returns when timed correctly. My current plan is to trade the intermediate trends, holding positions days to weeks (maybe months if they just keep going). I have settled on the weekly MACD indicator as the trend follower that seems to provide a good balance of sensitivity and smoothing. I also plan to follow Elder's recommendation to short in down trends, with the best time to buy being after a bouce up (vice versa for up trends). That said, as I watch this market today, I find myself in a situtaion when I am not sure I can determine the trend. The trend for months has obviously been down for most stocks, Yesterday there was bounce in XLF, so I took a short position under the close and was stopped in today in the volitilty up and down. So far so good, but after today's run up, the weekly MACD has started to trend back up, and the daily MACD just crossed into positive territory. Is the trend up or down?? I personally think the bad news is nowhere near over with respect to housing and the financial sector, so it sure feels like a two day run up isn't enough to end this down trend. But if I am supposed to mechanically trade according to my indicator, suddenly it says "buy". Can anyone help a newbie and offer some thoughts and how you consider situations like this? Thanks for your help!
1) Use price to determine trend, not a derivative of price such as MACD. 2) It may feel more comfortable to initiate positions during a retracement from the primary trend while having the expectation that the trend will resume after you put on a position. You're attempting to second-guess the market if you do that. 3) If you're a true trend-follower, you should be initiating positions on price breakouts into "fresh" low/high territory, where it may feel the most uncomfortable to do so. 4) The end of a trend tends to be most volatile, where you have a higher liklihood of being whipsawed. 5) 3 consecutive closes against the trend is a "safer" place to pick a reversal.
No truer words exist. I've come to rather enjoy trading corrections of peaks and troughs against and pullbacks with. I'm working on always being in, 0900 to 1615. Oh and support held to the penny yesterday morning's correction. Today ought to be one hell of a rally.
The real value in popping in once in awhile and seeing stupid rubbish like( ("I am working on being in all day long and capture every tick") (paraphrased) is why it is so easy to take these clowns money. The real secret to making money in the mkt is just keep telling yourself there are more stupid idiots always showing up to give you their money. Xuanxue, keep up the good work. In another thread some clown is driving himself nuts trying to convince himself as a bs artist that volume is the answer. Why do i torture myself in the morning for 10 mintues with all this? hahahaha
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Any 'ole Joe can be an asshole, pretend like he has a clue by spouting ad hominem attacks, generalities and bandy about as if it's not apparent to the all who care to notice that he's nothing but a stalker hunting for a back-woods bubba's steamy cock in his ass. You're found out, now be a good lad and remove yourself from the genepool.
Welcome to ET Robwynge... there are lots of bridges here, take a good look underneath before crossing. Good luck.
Thank you all for your responses. I am sure my question probably seemed amaturish, but then again, I am an amature who is new to this. I appreciate your willingness to help. I do notice that much of the advice conflicts with what I read in Elder and Murphy's books, though the breakout idea is in Curtis's book. All the differing advice does make it hard for a new guy to settle on a plan. I guess that is part of the learning process. Thanks again