There's only two ways to trade.

When you get down to basics there's only two ways to trade. You can try to pick tops and bottoms, or you can trade momentum.

Whether you're scalping the 5 min, or position trading you're either picking tops and bottoms or you're trying to trade in the direction of the movement, IE momentum. I can't think of any other way you can trade.

I'm sure i'm not the first person to think of this, but it's pretty interesting when you consider it so I thought i'd post it.

That's well put; I think of it as trading either reversion to the trend (top & bottom picking) or trading with the trend. AFAICS both work.....

what about long term funamentals?

using interest rate difference in pairs and hold a position based on what u expect the rate to be x time from now

I'm currently experimenting with 3 different entry methods:

1) Pullbacks in trends (method discussed here: http://www.forexfactory.com/showpost.php?p=1502665&postcount=102);
2) Fading OB/OS extremes - which is basically picking tops and bottoms;
3) Breakouts from congestion (tight channels, wedges, etc).

If the breakout is in the direction of the trend, then I guess this is a kind of momentum trade, albeit with a later entry than (1). Whereas if the breakout is in the opposite direction, and is prolonged enough, then it leaves a top or bottom in its wake, which is akin to (2).

If I understand them correctly, methods like Vegas and the River (which IMHO don't really fall into these 3 categories) are momentum based, but they delay entry until price has crossed the median line.

Anyway, it makes sense that there are really only 2 types of 'directional' trade, because the trend can only ever continue, or reverse.
Apart from direction, there is really only one other aspect to entry: timing.

With regard to timing, all technical indicators basically serve much the same purpose. No single indicator is really "better" than another (illustration here: http://www.forexfactory.com/showthread.php?p=172226#post172226), because ultimately one must enter on a price bar (and then exit on a price bar). The same indicator can be used, but calibrated differently, to provide entry on an earlier, or later, bar. Optimizing indicators has the effect of tinkering with entry timing.

I've read that indicators lag price action, but - if we want to be pedantic - bars/candles are actually also summaries that lag the up-to-the-tick action. For example, by the time a pin bar has fully formed, the swing high/low has already been established. An indicator (e.g. moving average crossover) on a shorter timeframe may have given an earlier entry signal.

Sorry, I've gotten off-topic.

David

There are an infinite number of ways to trade.

Balogna. If you're trading off of a chart you're either picking tops and bottoms or you're trading momentum. AKA trend trading. There's nothing else.

What about em? I don't trade by looking at "long term fundamentals" and I bet you don't either. I trade technically off the charts and if you do that you're either picking tops and bottoms or trading momentum.

If you say so big boy.

You didn't quote the part of his post that says your wrong. My friend doesn't care what way the markets going, up or down, left, right... top bottom, backwards... he makes the exact same amount of money every day.

And no its not "nothing"!

It's slower than someone who's good, but it's still 150%'sh a year.

So yeah, your wrong.

To me personally, trend is the direction, not the momentum, so I guess we'll just have to agree to disagree on that one.

You're not disproving what i'm saying. All you did was mention some crap about how your buddy opens a trade no matter what the market is doing and makes money everyday doing it.

Let me revise my statement seeing as people are bringing up fundamentals. The only two ways to trade technically are to pick tops and bottoms or trade momentum.

Warmagus -

I think even trading fundamentally you're still doing the same thing in spite of it being a fundamental vs. technical decision. All of this relies on buying at a lower price than when the trade is closed or vice versa for a short (at least that's the goal!). Whether you're trading fundamentally or technically this NEEDS to happen in order to be profitable and continue trading. Yes, there are an infinite number of ways in which to approach entry and exit definition and methodology, but you're right, you either try to identify tops and bottoms or trend follow. No matter how many trend lines, indicators, tea leaves, moon cycles, etc are in place, profit only comes by the buy low/sell high or short high/cover low method.

I'd even go so far as to say that a carry-trade (fundamentally based) is still accomplishing the same thing indirectly. If you open a long position in the GBP/JPY you're most likely going to be buying low and selling higher even if your goal is to collect swap interest, and that is a result of lots of traders doing the same thing and pushing up the demand for GBP while driving down the demand for JPY. If you sell for lower than your buy price you're probably going to wipe out any swap you collected. So, while you're not specifically looking to pick a top or bottom or ride a trend, if you don't do so as a fundamental trader you're going to be behind the eight ball real soon.

About the only way to trade besides technically or fundamentally is to hedge - and I mean an honest hedge like Cargill or Kelloggs would do. Not something to soften the impact of a speculative trade-gone-wrong. They're still suffering from market movement, but they aren't speculating or investing, they're using the market to shift price risk to speculators.

So, I guess you could say the only two ways to SPECULATE are to pick tops and bottoms or trend follow - no matter if you're a fundamental trader or technician.

-=DAVE=-

^^^ You said it better than I can.

I guess you are right. Anyway, 90% traders still lose money even after realizing that.

i thought there is only 1 way to trade,, that is by put your position into the market.....:

Reality: Bringing trading down to a couple of basic trading strategy objectives; momentum/tops bottoms is rarely a forex topic as there are a hundred ways to skin a cat. A hundred ways to trade a market, which is what newbie 'traders' are really interested in. As Learning about trading IS interesting. That's why there are tons of people making money from selling trading courses full of 'facts' and 'information'. And once you are done with those, you buy courses telling you how crap the other courses and techniques are, and you are told to make a 'paradigm shift'!

One forex marketteer bouncing of another. Its an ingenious marketting web or triangle of 'How to Trade' or 'Make a Killing in the Markets' (I call this 'striangulation'- the newbie trader being shunted from one marketeer to the other: A triangle of techniques and informationists: from the fundamentalist/newstrader to the techy to the psychologist...back and forth. But its usually the psychologist at the top of the triangle tapping his fingers impatiently waiting for you to really take on board what he is saying without offering practical trading advice.

My point is this: trading itself has to be the most boring job in the world. If its not boring, you are not doing it right and you are probably not making money. So, back to your argument. Bringing trading down to 2 very basic levels, that's all trading is. You are right, whatever...The boredom of it all is once again realized by some but a big surprise to the many who want to make it more interesting because they can't believe there is such little to it, and who can't wait to buy the next latest-up-to-datest forex strategy.

Without discipline you will always be fascinated by trading making it more interesting than it ever deserves to be. But you'll never make money from it until you are disciplined and bored. Take heed of this thread's topic.

Breakout is the most "reliable" signal as it can be identified beforehand to be our Entry-Price and we'll also get a market-defined Stop-Loss level at the same time ...