I hear a lot of daytraders talk about support/resistance, breakouts, oscillators, etc. But no one ever seems to discuss trend following. Does anyone out there look for stocks that are moving in a definite direction, jump on board, hoping to ride the momentum for a while? Or is the market just too choppy these days to do that? I haven't had much experience strictly trend trading, but it seems that the times that I have, the market is just getting ready to reverse. Anyone use trend following with success?
Find me a trend that has been consistent for more than 5 days. In all honesty, that would be great, but the only trend is a prevailing downward one with occasional extreme updrafts that kill you(besides coal stocks). Lately, i've just been fading every move, both up and down, but I'm a swing trader lately. Hopefully, if a trend begins, I'll go back to breakout trading. I've had 2 good brekout wins all week (appb for 2.5 and cnx for 1.75) Every other one has ever been a loss or a very small win before my trailing stop took it out. When trends start to form again, I think everyone will trade much better. The last bull market tought everyone to be a trend follower and buy the stocks that were most up. I don't think people have been capable or willing to adapt to a choppy market which we have now. It is hard. It took me almost 2 months of losing before I finally addapted my new strategy that is more apropriate(see great new pattern thread). Hopefully, I will be able to go back to trend following when the market gets more consistent. Even if the market is a bear market, some stocks always are going up, but besides coal stocks I can't think of any.
I've been quite successful riding the downtrend during this bear market the past couple of months. For instance, I held a short position on JNPR for a 3 week period. We're at a time currently where (at least in the NASDAQ) there has been so much selling that the downtrend of the past few months has pretty much stalled out, and it could go either way from here, although my personal belief is that unless the Dow and S&P crash like the NAZ has, the market will be rangebound for some time to come.
I'm thinking more along the lines of an intraday trend. You look at one of your charts, it's in a definite trend, whether up or down, and you jump on board. I don't mean one that is going up or down violently, so you can't even jump on without paying a large premium, but a nice, steady trend. Is this a loser's game? Are there too many reversals? If you trend folllow, you're not going to miss any major moves. But I just wonder if whipsaws and reversals will eat up all those profits.
For intraday right now, there are trends (mostly down), but in order to stay in you need to keep looser stops with the whipping around that happens. The safest play these days intraday is to take quick profits, as it is much tougher to stay in a trade to ride a trend.
I agree zboy. There are multipoint trends intraday, but you'd have to keep your stops very loose (maybe a point or more). That's never been my style. My stop is rarely more than .25 usually less. Then I trail it with maybe a .2 stop or less. I'd get whipped around. But i've also been pretty good at finding climax points and fading them and then scaling out as it goes my way.
mjt Markets trend only about 20% of the time. Lately we are trending but on the downside. It looks like we might have found a short term support level,don't count on this holding for very long, that is holding for now. I trade breakouts on a one minute bar and ride them all day trailing my stop on the positive days. I also trade reversals, gaps / boomers and busters. That gives me plenty to do each day. I'd love to ride a trend but nothing has follow through lately so short term only for me. rtharp