Do You Want to Learn to be a Trend Trader?
In a conversation with a fellow trader I was asked, “Don’t you worry about being wrong when you’re pointing out trades in front of a room full of people?”
Nobody likes to be wrong, especially in front of all your friends and clients. I thought about this for a moment, because while I fear losing money I had never focused on fearing being wrong in front of others. I did used to have dreams of being at school, or out at the park, and realizing I had no clothes on – which were nothing short of terrifying.
I told him, “No…I don’t fear that, because I cheat. I only point out trend trades”. I said that because I know the statistical value of highlighting set-ups and signals in-line with the higher time frame trends, compared to basing directional decisions on intraday charts.
I also showed him the trade we highlighted yesterday in the Live Market Exercise and why. See EURUSD chart below.
The advantage of taking a trade on a short-term chart – in this case 3 minute– but in-line with the long-term trends, is two-fold. Number 1 your reward tends to be higher because you are inline w/ the higher time frame trends, and #2 your risk is less because your stop loss is based on the time frame chart you are taking the trade on.
There are times to take counter-trend signals for sure. Essentially every time you exit a trend trade you are executing a counter-trend trigger. And then there are those times when even the higher time frames are down, yet you are seeing a signal on historic support, and you feel the trade is worth the risk/reward. Overall though you will find that taking signals in-line with the Daily and 240-minute trends will yield much more desirable results than chasing directional “fools gold” on the 60 & 15-minute charts.
To attend a live, interactive demonstration on how we use price to determine market direction on all time frames click on Directional Line Overview
Jay Norris is host of Live Market Exercise at Clovernest.com
To win a $3,499 scholarship, courtesy of Trading University in Chicago click on: Trading-U Scholarship
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor!
