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Is The Trend Really Your Friend?

  • #21
  • Dec 9, 2006 9:26am Dec 9, 2006 9:26am
...what Identifies a trend...is it a long 200+ pip movement with little
deviation..I want to know this because I want to follow the trend,
and know when one is about to start.










Quoting ForexASDF
I've always heard that "The trend is your friend", but my testing says that trading against the trend is more profitable that trading with the trend.

What general style of trading do you believe is most profitable? Comments are appreciated.
  • #22
  • Dec 9, 2006 11:11am Dec 9, 2006 11:11am
Quoting rosso832
Hi all

The Trend is really very important. But, it can be relative in different time frames. We have to find right way, choose right time frame and follow the trend. That`s the way to make some pips.
I also can tell you:"You have to be in the right place at the right time"

GD luck
Hi rosso832,

I agree with all that you say above.


How do you know what the trend is?

Set your favoured time frame.

1. If the graph on the chart starts in the bottom left hand corner and ends in the top right hand corner, the market is going UP.

2. If the graph on the chart starts in the top left hand corner and ends in the bottom right hand corner, the market is going DOWN.

3. If you are still confused, print it off and show it to a 5 year old...they will get it right EVERY time...LOL

The trend is the BEST friend you will ever have in the Forex market.

When you trade with the trend, even if you make a mistake, the market will get you out of your problem....If you make a mistake and you are fighting the trend ...YOU ARE STUFFED, BIG TIME !!!

EVERYONE SHOULD TEST OUT THIS VERY UNUSUAL AND RARELY USED STRATEGY;

1. buy/ sell ONLY in the direction of the major trend and
2. buy/sell on dips.(Use support lines to guide you as to price... I also use the 50% Fib ratio..and "round numbers"....That's it, nothing else.)
3. bank your profits
  • #23
  • Dec 9, 2006 11:25am Dec 9, 2006 11:25am
Sorry for the joke, i erased it wasn't nice from me.. I think you mean how to identifie trend reversal. It is depending on what time frame and indicator you are using.

But We can easily say that when price past resistance (or support) point and then past previous resistance (or support) point you may say that range is broken and major trend is resuming.


Quoting ANALEX
...what Identifies a trend...is it a long 200+ pip movement with little
deviation..I want to know this because I want to follow the trend,
and know when one is about to start.
Harmonics and Pitchfork using korHarmonics from TradingArsenal
  • #24
  • Dec 9, 2006 4:56pm Dec 9, 2006 4:56pm
Quoting shahfx
A person who drives the wrong way on a one way street??Me,dnt think so?
Bad analogy. The market is definitely not a one way street.
  • #25
  • Dec 9, 2006 6:11pm Dec 9, 2006 6:11pm
The way I learned it is:

The trend is your friend... until the end.

Knowing when to get out is more important then know when to get in.
  • #26
  • Dec 9, 2006 6:49pm Dec 9, 2006 6:49pm
I'm going to move on to a new subject, but to put my final opinion on this one I would say that I've run several more backtests today (in addition to the hundreds or thousands I've run over the last 5 years) and I still can't prove that the trend is your friend. I remain unconvinced, but I may place some paper trades (with my IB paper trade account) on the trend next week and see where they go.

Thanks to everyone.

Steve
  • #27
  • Dec 9, 2006 7:52pm Dec 9, 2006 7:52pm
Quoting ForexASDF
Bad analogy. The market is definitely not a one way street.

Most of the newbie think so..

Bye
  • #28
  • Dec 9, 2006 9:30pm Dec 9, 2006 9:30pm
Quoting jacko
Hi rosso832,

I agree with all that you say above.


How do you know what the trend is?

Set your favoured time frame.

1. If the graph on the chart starts in the bottom left hand corner and ends in the top right hand corner, the market is going UP.

2. If the graph on the chart starts in the top left hand corner and ends in the bottom right hand corner, the market is going DOWN.

3. If you are still confused, print it off and show it to a 5 year old...they will get it right EVERY time...LOL

The trend is the BEST friend you will ever have in the Forex market.

When you trade with the trend, even if you make a mistake, the market will get you out of your problem....If you make a mistake and you are fighting the trend ...YOU ARE STUFFED, BIG TIME !!!

EVERYONE SHOULD TEST OUT THIS VERY UNUSUAL AND RARELY USED STRATEGY;

1. buy/ sell ONLY in the direction of the major trend and
2. buy/sell on dips.(Use support lines to guide you as to price... I also use the 50% Fib ratio..and "round numbers"....That's it, nothing else.)
3. bank your profits
Jacko,

That's great. Very clear and simple. I have tried so many methods of trend trading with some success but I tend to overcomplicate things. Maybe this is one of the things that stands in the way of my success.

To hear this from one as exprienced and knowlegable as yourself is quite an eye opener.

One of the problems I have in trend trading is getting stopped out too early anly to see the market reverse while i remain out of the move. Do you have any reccomendations to overcome this problem?

Thanks, Wiz.
  • #29
  • Dec 9, 2006 9:43pm Dec 9, 2006 9:43pm
Quoting ForexASDF
I'm going to move on to a new subject, but to put my final opinion on this one I would say that I've run several more backtests today (in addition to the hundreds or thousands I've run over the last 5 years) and I still can't prove that the trend is your friend. I remain unconvinced, but I may place some paper trades (with my IB paper trade account) on the trend next week and see where they go.

Thanks to everyone.

Steve
OK, well let's say this. If the trend is up, the price is going up. Therefore, trend can be defined as where the price is moving. Can you see how trading in the direction the price is going (ie the trend) will be profitable over the long run, and trading where price is not going will hardly be profitable in the long run.

That's the best explanation I can give.

andersenws
"Youth is the trustee of prosperity." - Benjamin Disraeli
  • #30
  • Dec 9, 2006 10:47pm Dec 9, 2006 10:47pm
What kind of backtest di you run? With what EA/ Indicator or method you are using?

Quoting ForexASDF
I'm going to move on to a new subject, but to put my final opinion on this one I would say that I've run several more backtests today (in addition to the hundreds or thousands I've run over the last 5 years) and I still can't prove that the trend is your friend. I remain unconvinced, but I may place some paper trades (with my IB paper trade account) on the trend next week and see where they go.

Thanks to everyone.

Steve
Harmonics and Pitchfork using korHarmonics from TradingArsenal
  • #31
  • Dec 9, 2006 10:55pm Dec 9, 2006 10:55pm
I have backtested systems based on price action which made many contertrend trades. When I added, say a HMA filter a timeframe above, you would have though this was a no brainer to make the system better right? But everytime the system would become less profitable. I basically put this down to most trend indicators being lagged, the human brain can see what is going on but a automated system only see's the slope of the HMA which may be at odds with the price action. Hence the trend being your friend really depends on how you define the trend itself.
The breaking of a wave cannot explain the whole sea.
  • #32
  • Dec 10, 2006 5:58am Dec 10, 2006 5:58am
The problem is, 99% of traders are aware of the "the trend is your friend" slogan but 95% still fail. It takes more to be a successful trader than one silly little slogan.

People were trying to "get in on the trend" when cable was at 1.98 when that was obviously the right time to be shorting it. I'm not just saying that with hindsight, I was saying it at the time (check out the cable thread).

To be a successful trader you need some sort of system and the best ones are those that identify when the market is turning.
  • #33
  • Dec 11, 2006 5:44am Dec 11, 2006 5:44am
Quoting The Wizard of Oz
Jacko,

That's great. Very clear and simple. I have tried so many methods of trend trading with some success but I tend to overcomplicate things. Maybe this is one of the things that stands in the way of my success.

To hear this from one as exprienced and knowlegable as yourself is quite an eye opener.

One of the problems I have in trend trading is getting stopped out too early anly to see the market reverse while i remain out of the move. Do you have any reccomendations to overcome this problem?

Thanks, Wiz.
The Forexmarkets are arguably the most "trendy" market there is, especially the Euro.

Once a trend is in place, it takes a lot of power to reverse it. Take a look at the weekly charts. This current "long" started back in early Dec 2005 at approx 1.1650. (nearly 1700 pips from where it is now) It had a relatively "minor" correction from approx 1.3000 to 1.2500 before continuing on to where it is today.

Even more strong evidence for the power of the trend is that the above "long" is part of an even stronger "long" from 0.8363 from July 2001.

Buy on dips and hold (Euros, GBP etc)...

And use the Jacko hedging method if it goes against you in the short term.
http://www.forexfactory.com/forexfor...721#post132721

(It works brilliantly)

<!-- / message --><!-- sig -->
  • #34
  • Dec 11, 2006 6:26am Dec 11, 2006 6:26am
The trend is your friend on the higher timeframe.
The countertrend is your friend on the lower timeframe.

Combined you get to trade with the trend, with low risk entries.
In trading you are only as smart as your dumbest mistake. - Ralph Vince
  • #35
  • Dec 11, 2006 6:59am Dec 11, 2006 6:59am
Quoting SliverB
The trend is your friend on the higher timeframe.
The countertrend is your friend on the lower timeframe.

Combined you get to trade with the trend, with low risk entries.
Hi SilverB,

1. I agree with what you are saying but some people here seem to want to bet on every tic. The thing that kills new traders is the "wild punting" on everything that moves two ticks.

2. A much wiser man than me once told me to stop thinking that you have to "outsmart" the market.
You don't have to..this business is very easy if you leave your brain at the door....just follow the trend = follow the money =going with the flow = barking with the big dogs.

Stop thinking that "it can't be that easy".......it is!!!
  • #36
  • Dec 11, 2006 7:29am Dec 11, 2006 7:29am
Hi,mr jacko..U remind me of someone or character i read from Reminiscencs of Stock Operator-Mr partridge(very smart Investor)
  • #37
  • Dec 11, 2006 8:03am Dec 11, 2006 8:03am
Jacko,
I love your advice and the way you deliver it. I follow a 180 minute trend now, and go for small profits. (If you are wondering where the 180 minute time frame comes from, I bought 4X Made Easy... yeah, yeah - laugh it up.) Anyway, traders with your confidence inspire me greatly. Would you mind sharing your criteria for identifying a trend?
Bob


Quoting jacko
Hi SilverB,

1. I agree with what you are saying but some people here seem to want to bet on every tic. The thing that kills new traders is the "wild punting" on everything that moves two ticks.

2. A much wiser man than me once told me to stop thinking that you have to "outsmart" the market.
You don't have to..this business is very easy if you leave your brain at the door....just follow the trend = follow the money =going with the flow = barking with the big dogs.

Stop thinking that "it can't be that easy".......it is!!!
  • #38
  • Dec 11, 2006 8:17am Dec 11, 2006 8:17am
Quoting brick911
Jacko,
I love your advice and the way you deliver it. I follow a 180 minute trend now, and go for small profits. (If you are wondering where the 180 minute time frame comes from, I bought 4X Made Easy... yeah, yeah - laugh it up.) Anyway, traders with your confidence inspire me greatly. Would you mind sharing your criteria for identifying a trend?
Bob
Hi Bob,

How do you know what the trend is?

Determine and set your favoured time frame.

1. If the graph on the chart starts in the bottom left hand corner and ends in the top right hand corner, the market is going UP.

2. If the graph on the chart starts in the top left hand corner and ends in the bottom right hand corner, the market is going DOWN.

3. If you are still confused, print it off and show it to a 5 year old...they will get it right EVERY time...LOL

The trend is the BEST friend you will ever have in the Forex market.


Also, KISS it (Keep It Short and Simple)

I only use:
1. minimal numbers of trend lines (2 at the most)
2. the ONLY Fibonacci number I use is the 50% number....
3. Apart from that, I think the round numbers (1.2900...1.3000...etc) are valuable.
That's the limit of my T/A...

Note: I do NOT use any moving averages (or any other of the fancy measures). They are historical numbers!!!

The reasons that I use only trend lines, the 50% Fib number, and round numbers is that the big players ALL use them. The more complex you make your trading parameters, the less number of people will be using them.
  • #39
  • Dec 11, 2006 8:49am Dec 11, 2006 8:49am
Quoting SliverB
The trend is your friend on the higher timeframe.
The countertrend is your friend on the lower timeframe.

Combined you get to trade with the trend, with low risk entries.
I would say exactly the opposite. The forex market is full of little rallies and falls that last only a few weeks before reversing. It's a swing trader's dream. Sell when the daily oscillators are overbought and coming down, buy when the daily oscillators and oversold and coming up.
  • #40
  • Jan 31, 2007 1:18am Jan 31, 2007 1:18am
Quoting jacko
Hi Bob,

How do you know what the trend is?

Determine and set your favoured time frame.

1. If the graph on the chart starts in the bottom left hand corner and ends in the top right hand corner, the market is going UP.

2. If the graph on the chart starts in the top left hand corner and ends in the bottom right hand corner, the market is going DOWN.

3. If you are still confused, print it off and show it to a 5 year old...they will get it right EVERY time...LOL

The trend is the BEST friend you will ever have in the Forex market.


Also, KISS it (Keep It Short and Simple)

I only use:
1. minimal numbers of trend lines (2 at the most)
2. the ONLY Fibonacci number I use is the 50% number....
3. Apart from that, I think the round numbers (1.2900...1.3000...etc) are valuable.
That's the limit of my T/A...

Note: I do NOT use any moving averages (or any other of the fancy measures). They are historical numbers!!!

The reasons that I use only trend lines, the 50% Fib number, and round numbers is that the big players ALL use them. The more complex you make your trading parameters, the less number of people will be using them.

Great advice. Thanks Jacko.

Another tips I wanna share. To avoid overtrading (itching to trade), enter a position using daily charts, and use trailing stops. As long as the position is in the market, your brain will automatically stop "itching to trade" because you already have a position there. Lol. It works for me. Less trade made, less risk of losing and you ride on your winners.
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