What does it mean to trade with the trend - Define trend?

Changing time frame to find another trend doesn’t make a trend less true, quite the opposite actually. A contradictory trend on a lower time frame doesn’t mean a trend doesn’t exist, It just proves that trends do exists and that the market is a fractal.

"If markets are random and unpredictable then I'm brilliant, but everyone who knows me knows I just play video games for a living and am, therefore, not brilliant. Therefore, because I am not brilliant, markets are not random and, therefore, are predictable."

Krecci, I've battled with this same question, "What is a trend?," in my quest to turn my video game of trading into an algo.

I've been taught a top down approach and that, in the end, the largest time frame always wins. But, I don't agree with what I was taught because even the largest time frame trend ends and within that largest time frame trend ending, the smaller charts were already "trending" the other way.

So I shortened the argument in my mind and just use three consecutive time frames with the largest as my overall trend/direction/target guide and the smallest for my entry based the middle one as my signal...most of the time. Then, we throw in supply/demand at extreme areas on the charts to show when trends have reversed in the past and may reverse in the present, add a moving average as my trend line along with an actual trend line, and a sentiment indicator and I STILL HAVE NO CLUE HOW TO DEFINE A TREND!

So, I just trade what I see based on my system. 1, 5 and 15 for scalping. 15, 1 and 4/day for swing trades lasting 1 to 3 or 4 days and 4, day, week for longer hold times if the force, err, swap, is with me; which it isn't normally because a lot of currency pairs have negative swap both ways now.

Krecci, start at Post 24 to see my work on GJ during part of the period you have circled in your last chart picture: https://www.forexfactory.com/thread/...s-it-out-of-my? It was some very difficult trading. So difficult, in fact, that one of my posts is titled "War of the Time Frames!".

It's not perfect. I'm not brilliant. Now, let's talk about something easier; like how to draw a trend line. ; )

LDFX, you're so right...in fact, to go along with what you've said, "A contradictory trend on a lower time frame doesn't mean a trend doesn't exist..."

For my trading, a contradictory trend on a lower time frame typically means it's time to prepare to enter a trade in the direction of the higher time frame that the lower time frame is contradicting! And, like you said, it proves the trend.

You are much more eloquent than I could put it.

Not only the market is fractal but our thoughts too

An example of an uptrend (higher and higher supports) ...

Krecci, another thought that might help: Trend for me depends initially on something other than the structure of higher highs/lows or lower highs/lows. Maybe you're starting at step 2 instead of starting at step 1? Just throwing out ideas here so maybe I'm right, maybe I'm not, but let's keep going with the process i use:

Consider step 1 as Where should current trend reverse and a new trend begin? - identify potential reversal areas. Then confirm that change in trend, reversal, with what becomes now step two's structure of higher highs/lows or lower highs/lows.

Reading your post several times, this is where I feel I have an edge in the market and this might help you? I do depend very much on your structure of higher highs/lows or lower highs/lows, but I start with a reversal of trend to make sure I have my starting point correct.

if i do not have a reversal then i continue with the current trend. Meaning, in the last picture you posted, you had already had a reversal a few days before from an extreme area and were waiting for it to consolidate at the higher area and then show a confirmation of it via a higher low and that higher low, although way higher than the reversal low, was the first entry in your system of higher highs/lows, lower highs/lows for an entry on your large time frame.

i try to show what i just went over in the first picture below using a Weekly chart.

Now, if you're looking at the weekly chart purely for extremes where trend might reverse and you actually enter on the lower time frames then look at picture 2 for the Day chart for the entry and the target for a longer term trade. The target I drew is called a Measured Move. Measure the original move from reversal bottom to the highest point/fractal. It was 1066 pips. Then measure from the low of your higher low entry area and go up 1066 pips for your target. (The red supply box that, if you look to the left on the chart, was the beginning of prior huge move down.)

The Day chart is shown in picture 2 and includes the Day entry area for the trade in question, along with the potential target calculation for a long term hold.

Picture 3 is the 15 minute chart showing the entry for the original reversal so you can see your higher low scenario on the smaller time frame.

Picture 4 is the 15 minute chart showing the entry for the higher low continuation up at the end of the consolidation after the original reversal on the large time frame.

Note one observation that doesn't really matter, but I found interesting while trading gj during that same time period...the reversal and the higher low entries were BOTH done coming into Sunday night/Monday (US NYC eastern time). So the big $ knew what they were going to do at the beginning of the week so they had been getting out of the shorts and going long the week before...it takes several days to get out of millions of dollars in trades and reverse. They have to do it in a way that allows price to continue down (in this scenario) while they close shorts and start accumulating longs - two actions that will cause price to go up if they close shorts and accumulate longs too fast; and if the market makers are not helping them keep price moving down - so they typically do it during a reason for a strong blow off/big move down and lay their lots off on the retailers...that's us...who get stuck holding the bag.

Now, i do understand that it's very easy for someone to draw on charts and make them look pretty months after the fact. i always hated that and it's a pet peeve of mine. If you look at my thread starting with post 24, it shows how i was trading gj during the end of the time period you circled in your last picture in the op. here's the link to the thread: https://www.forexfactory.com/thread/...s-it-out-of-my

I try very hard to post pictures of my trades right after i take them and the reasoning for the trades. i also post the trade journal showing the pips made/lost.
so you can see pictures of the charts in real time as basically the same price action was happening for GJ as was happening in GU at that time, instead of just seeing what i drew up for you tonight, months after the trading happened.

Well, this was fun to do. I don't know if it helped anyone, but it always helps me when i draw up my charts and walk through the reasoning for my actions. it really helps seeing a picture of the process that makes up a successful trade over and over until it's stuck in your head. it was really cool to recognize your chart and be able to see the picture of the price action in my head and go to my thread and find it. it definitely was not an easy time to trade during that consolidation and you'll see losses i took and then recovered immediately when i was wrong. yep, i have a simple system to recover what i lost.

i really do love this stuff! hope all of you reading this love it too. it's 5am here so it's time for a nap and then i need to work on my to do list.

edit: one other thing and this might be the most important one of all. I look at trading as a wheel inside a wheel inside a wheel. it's like russian nesting dolls where one fits inside the other and those two smaller dolls fit inside the next one, etc. That's how i see charts. the 15 is inside the 1, the 1 inside the 4 (or whatever 3 i'm using). they work together and when one is out of step there's a very high probability that it will get back in step. maybe that's my actual definition of trend?

Yes, seeing trend is easy after the chart has formed. The hard part is getting in at the beginning of a trend before it happens. That's why defining and identifying reversals at extremes on the higher time frames is needed before moving to using higher high/low or lower high/low on a smaller time frame to verify and enter the start of a new trend. And, what if you're wrong? Then you just close and reverse at the other side of the trade where your stop is...it's actually a break out set up in the direction of the original trend. So, where your stop is is also where your entry back with prevailing trend should be if you are wrong about the reversal area and a new trend has actually not started.

From my experience, 90-95% of trading, using a higher time frame as your guide, is with the trend; while only 5-10% of trading, using a higher time frame as your guide, are long term reversals of the trend. If a lower time frame is counter trend then identify potential reversal areas and be prepared at those areas to take a trade back with the trend on that lower time frame.

There is no reason to be scared of getting a reversal wrong because if you get back in at your stop loss with the breakout going in the original direction of the trend, the original direction will carry you quickly to recovering your loss and moving you into profit. you can be the most confident losing trader in the world because you have a plan in place that you do automatically if you are wrong. Lose 1 or 2%, gain back 1-11% moving back with the trade (based on my experience).

The above uptrend will change to a downtrend when the last identified support is broken ...