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Trading the Trend

  • #1
  • First Post: May 13, 2007 9:43am May 13, 2007 9:43am
Hi everyone,

Not long ago I was PM'ing with someone who was taking his first baby steps into Forex trading. He was telling me how he was demo'ing some of the systems explained in the system section of these forums with rather humble results. Then I reviewed some of his trades and I asked him "I see that a number of trades you take are counter-trend. You are aware of the extra risk of those traders, arent you?". I was shocked by his reply: "I dont know whether they are counter-trend or not. The system signaled an entry and I just took it. I heard that discipline and trust in the system is key"...

That got me curious: how many of you beginners are aware of where the trend actually is pointing out? do you follow a system blindly without taking into account the larger time frame or whether those signals swim against or along the flow? Fading the trend is a very complicate way of trading (I personally don't do it), so why do many beginners try to trade that way?
  • #2
  • May 13, 2007 10:46am May 13, 2007 10:46am
It would simply be suicide to trade against the trend. While, I am not a long term trader, I do follow the 4H trend which is pretty much enough for me.
  • #3
  • May 13, 2007 10:46am May 13, 2007 10:46am
Quoting WTB
Hi everyone,

Not long ago I was PM'ing with someone who was taking his first baby steps into Forex trading. He was telling me how he was demo'ing some of the systems explained in the system section of these forums with rather humble results. Then I reviewed some of his trades and I asked him "I see that a number of trades you take are counter-trend. You are aware of the extra risk of those traders, arent you?". I was shocked by his reply: "I dont know whether they are counter-trend or not. The system signaled an entry and I just took it. I heard that discipline and trust in the system is key"...

That got me curious: how many of you beginners are aware of where the trend actually is pointing out? do you follow a system blindly without taking into account the larger time frame or whether those signals swim against or along the flow? Fading the trend is a very complicate way of trading (I personally don't do it), so why do many beginners try to trade that way?
I have been trading for a little over 1 year and have tried most every system out there to one degree or another.
What I have finally come to realize by listening to the real traders (not the pretend to be) is their universal understanding of this one concept.
Trading WITH the trend!
Since I have started trading this way, my account is finally starting to look better.
I guess the trick is/was is to determine the trend for the time frame I was trading and to ensure the longer time frame(s) were in agreement.
While it may not be 100%, it is at this time at least 80% and perhaps 90%,
I am still learning and will only listen to those that understand the benefits of trading WITH trend.
Stan
  • #4
  • May 13, 2007 11:04am May 13, 2007 11:04am
I've always THOUGHT I was trading the trend, but really I was just trying to pick tops and bottoms. For me, "trading the trend" was a phrase open to MUCH opinion and hindsight.

Finally... FINALLY... I found FF and after spending countless hours studying the successes... they all seem to really focus on one main idea...

TRADE THE TREND.

The ONE MAJOR addition that I found though, was using multiple time frames (MTF). (Thanks to TEB63 and Spudfyre) Trading using MTF has really helped me to OBJECTIVELY see the trend and has helped me dramatically reduce the "interpretation" of a system.

Of course, my favorite trend following rule is still Jacko's ( )

... (paraphrasing here)..

"Look at a chart. Look at the price on the far left. Look at the price on the far right. If the price on the right is higher... trend is up. If the price on the right is lower... trend is down."
  • #5
  • May 13, 2007 11:29am May 13, 2007 11:29am
Quoting AggieTrader
I've always THOUGHT I was trading the trend, but really I was just trying to pick tops and bottoms. For me, "trading the trend" was a phrase open to MUCH opinion and hindsight.

Finally... FINALLY... I found FF and after spending countless hours studying the successes... they all seem to really focus on one main idea...

TRADE THE TREND.

The ONE MAJOR addition that I found though, was using multiple time frames (MTF). (Thanks to TEB63 and Spudfyre) Trading using MTF has really helped me to OBJECTIVELY see the trend and has helped me dramatically reduce the "interpretation" of a system.

Of course, my favorite trend following rule is still Jacko's ( )

... (paraphrasing here)..

"Look at a chart. Look at the price on the far left. Look at the price on the far right. If the price on the right is higher... trend is up. If the price on the right is lower... trend is down."
Well Said!!! And with continued practice...Well done!!!
  • #6
  • May 13, 2007 1:18pm May 13, 2007 1:18pm
Quoting Stuartesque
It would simply be suicide to trade against the trend.
For some people maybe. For others they do just fine going against the herd. Guys like Tudor Jones are pure contrarians and they do just fine for themselves. As one very wise man told me, the more proof you require, the more it costs you.
  • #7
  • May 14, 2007 5:41am May 14, 2007 5:41am
to be a contrarian seems to be a natural tendency among a lot of newcomers...they like to go against the "crowd"...gives them more reputation maybe...

the original contrarian approach was a bit different as shown by the old saying: the crowd is always wrong at major market TURNING points...(in the meantime the crowd is always right... )

btw, i dont think PTJ is a contrarian...he just aims for a very favorable risk:reward ratio on potential trades
  • #8
  • Last Post: Apr 18, 2023 12:56am Apr 18, 2023 12:56am
How I Made 35k this week trading forex.
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