Our previous post talked about trend – this discussion takes up where that one left off.

When I prepare to trade, I try to do a routine that always starts with evaluating trend – on each of my three intra-day trading charts.

First I look at the primary intra-day trading chart trend:

A. If the trend is strong, I will watch for trades in the direction of the trend.

B. If the trend is weak or sideways, I watch for trades in either direction.

Moving to the secondary intra-day chart trend:

If “A” is true – and the secondary intra-day chart trend is in the same direction – I will only take a trade in that direction.

If “A” is true – and the secondary intra-day chart trend is in a different direction – I will either:

Watch for a trade entry in the trend direction of the primary chart – IF the trend in the secondary chart appears to be about to reverse and move in that direction.

Or, watch for a trade in the opposite direction of the primary intra-day chart trend IF the secondary chart trend appears to be strong.

If “B” is true – I am watching for a trade in either direction – and pay most attention to the secondary chart. Trend always changes more frequently in the shorter time frames.

Of course, watching trend is only the first of a series of steps that must be followed in order to construct a trade.

Our next post will discuss the final step in our trend analysis – what we look for just before we enter a trade.

 

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