Pundits all say “the trend is your friend” – and we agree. But “the trend” is often not fully understood by many traders. My trading method uses multiple time frames – in most markets I use three intra-day charts. Each chart is set to a different time frame. It is not unusual for trend to be the same in all three charts – nor is it unusual for trend to be different in all three charts – or any combination of trends in the three charts.
So what is “the trend”?
Trend must be associated with a time frame to have significance.
It is not a bad thing that trend is different among my three intra-day charts. It fact, it is a good thing. It tells me a lot about strength of the market.
Strength – that is another aspect of trend. Trend has direction – up, down or sideways – and the up and down trends also have a strength component. A weak trend is a bit like a sideways trend – I can trade in either direction with the right trade setup. However a strong trend should only be traded in the trend direction. These generalities apply to the chart upon which the trade is to be constructed. But what about the other two charts used in short term trading?
The three charts are usually configured as follows:
1. A ticks per bar count that enables me to “See the Music of the Market” – this is our primary intra-day trading chart.
2. A secondary trading chart of about 1/10th the tick per bar count as the primary trading chart – I often construct trades on this chart.
3. Another chart of about 1/10th the tick per bar count as the secondary trading chart – I use this for entry and exits – and for scalping a market.
When the trend is the same on all three charts – and it is strong – I only trade in the direction of the trend.
When the trend on the primary chart is strong, but the trend on the secondary chart is flat or in the opposite direction, I may take a trade against the primary chart trend IF the setup looks really good – but I will watch price direction very closely and exit at the hint of a reversal on my trading chart.
If the trend on the primary chart is weak, I will generally trade in either direction from the secondary chart.
This is only a small part of what understanding and using trend can do to help you become a better trader.
I will talk more about trend trading implications and methods for the next few days.
Exchange rates table is provided by DailyForex.com - Forex Reviews and News
Live currency cross rates is provided by DailyForex.com - Forex Reviews and News
Live indices widget is provided by DailyForex.com - Forex Reviews and News
Live commodities widget is provided by DailyForex.com - Forex Reviews and News
Author & Trader
the SRV’s are spot on !!Tom CUSA
Thanks for the method !! Very solid, very logical entry and exit and genius SRV’s !!Denis DRussia
Great system – couldn’t trade without it !!Frank YDavid, Panama
….very impressed with the whole philosophy – both personal and trading, expressed in the book. I will read and revert !!Richard DUSA
I trade the US Bond Markets exclusively – amazed at the accuracy of the SRV’s !!George SNew York, NY
“The SRV’s are amazingly accurate”.Tony Texas
- January 2017 (1)
- December 2016 (3)
- September 2016 (2)
- August 2016 (2)
- July 2016 (2)
- June 2016 (5)
- May 2016 (1)
- April 2016 (2)
- March 2016 (1)
- February 2016 (3)
- January 2016 (3)
- December 2015 (1)
- November 2015 (3)
- October 2015 (5)
- September 2015 (5)
- August 2015 (2)
- July 2015 (5)
- May 2015 (1)
- April 2015 (1)
- March 2015 (1)
- January 2015 (1)
- November 2014 (1)
- October 2014 (1)
- August 2014 (1)
- July 2014 (6)
- June 2014 (3)
- May 2014 (5)
- April 2014 (2)
- March 2014 (2)
- February 2014 (2)
- January 2014 (10)
- December 2013 (11)
- November 2013 (20)
- October 2013 (13)
- September 2013 (14)
- August 2013 (10)
- July 2013 (26)
- June 2013 (16)