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Is The Trend Really Your Friend?

  • #61
  • Feb 10, 2007 7:54am Feb 10, 2007 7:54am
Quoting robbooker
Jacko, this is one of my most favorite comments ever written on FF. Gosh, I've made things way too complicated at times. I remember meeting a trader who taught his 8 year old son to trade, and the kid would come home from school, during the "lame" market hours of the Asian session, and implement a simple set of rules. The 8 year old was more profitable than his father week in and week out. The kid just didn't overcomplicate things.

Thanks for your comment. I am still smiling about it.
Thanks for your kind comments.

Maybe we should employ a team of pre-schoolers to trade on our behalf.

We could pay them in Power Ranger toys each month.

.
  • #62
  • Feb 10, 2007 7:59am Feb 10, 2007 7:59am
A much wiser man than me once told me to stop thinking that you have to "outsmart" the market.

This business is very easy if you leave your brain (and ego) 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!!!

.
  • #63
  • Edited 1:52pm Feb 10, 2007 1:40pm | Edited 1:52pm
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
Hi Jacko,

I have been thinking about few points that you have made in this thread. And as I stated previously, I do not have any problems with the philosophical principal that "Trend is Your Friend". However, another popular principal that is well documented not only trading but in sociology, "Buy Low, Sell High", and it is great part of our nature, is opposite to the trend assertion. We all like deals and you do not have to go far to see a great deal of prove of that.

Having said that I wanted to illustrate this very same point based on some of your trades. I am doing this exercise with great deal of respect for you and your trading experience that you have brought to this forum.

There are 2 trades that have been documented that do not fit the principal of trading in a longer term trend.

1. The trade of shorting Euro at 1.3270 in early January. The chart is attached below
2. Is short on GBPUSD at 1.9700. This one went against you but you reentered with anti-hedging method and hopefully stayed long enough to get to your anticipated support level of 1.9500.

In both instances, major trend was up but approaching the high points as we know now of course. The longer term trendline in euro trade was holding and correction shorter trend line down was broken above. If you were strictly trading with your trading method and not looking at any other factors, that trade could have not gone short, at least based from that chart.

GBPUSD was in quite an uptrend at that time and was approaching highs too but the major trend was up and there were no signs for reversal except that we knew that the correction should be coming which essentially was true and next day we hit tha correction trade. But again based on your trading formula, you could have not gone short.

There are 2 more interesting points in those trades. Based on one of the posts you were still holding to this EURO trade in mid January at 1.2800's which was excelent for you. But what I do not understand how 50 pips trailing stops held you in this trade for so long. There had been retraces for much more than 100 pips during that run. That might be caused of my limited experience with trailing stops.

The last point about your remark regarding "targets". In your GBP trade, you stated that your were targeting 1.9500, which was exactly what I implied in my post. One would not know for sure that we rich the targeted areas but still that target plays some role in pulling trigger and other parameters around a trade.

I want to make sure that you do not misunderstand my intention here. My intent is to clarify your trading plan. More specifically, the deviation when you trade with major trend and when you trade reversals/corrections, how the trailing stops have worked and if some potential targets get you to change of any of the above parameters (entry point, trends, stop loss, trailing stops) or deviate from your trading plan

Thanks a lot for all great information you have been providing.
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  • #64
  • Feb 11, 2007 4:42am Feb 11, 2007 4:42am
Quoting jacko
Thanks for your kind comments.

Maybe we should employ a team of pre-schoolers to trade on our behalf.

We could pay them in Power Ranger toys each month.

.
I will send you my 6 year old girl. Then she can look after me into old age.
  • #65
  • Feb 13, 2007 11:37am Feb 13, 2007 11:37am
Jacko,

just for a sake of this discussion, do you consider GBPUSD major trend up or down?

You have great points but as in the previous post, Lenny pointed out 2 trades that appear to be against major trend.

Just want to hear your comments

tradeit
  • #66
  • Edited 10:59am Feb 15, 2007 10:48am | Edited 10:59am
Hi Lenny,

Sorry about the delay in responding but I only travel past the FF site when I have spare time...

Firstly to answer your questions:
Quote
Originally Posted by Lenny

There are 2 trades that have been documented that do not fit the principal of trading in a longer term trend.

1. The trade of shorting Euro at 1.3270 in early January. The chart is attached below
2. Is short on GBPUSD at 1.9700. This one went against you but you reentered with anti-hedging method and hopefully stayed long enough to get to your anticipated support level of 1.9500.

You are correct...both of these trades were successful and were AGAINST the long term trend.

There are two reasons for me documenting those trades

1. These trades were exceptions to my standard trading.
My standard trading pattern has been clearly set out here so there is no value in stating a standard trade. ((For example, as I type, the Euro is at 1.3140...If I wanted to place a trade right now I would... buy it at 1.3140...set a 50 pip stop loss...if I am stopped out (at 1.3090), I would wait for it to hit 1.3040...then (using the anti-hedging stategy), I would place a Stop Buy order at 1.3090... and wait for the trend to reverse and pick up my Buy order.))

2. Because they were exceptions, I considered them to be of interest to traders who had read my trading posts but had PM'd me and asked for more information about "how" I trade whilst holding on to long term trades.

3. However, albeit that both trades were profitable, I still consider both of those trades as "dalliances" from my basic core business of trading the major trend...and, in no way, would I recommend that traders trade that way as a standard trading method.

Secondly, in relation to the following:
Quote
Originally Posted by Lenny
In both instances, major trend was up but approaching the high points as we know now of course.

........
GBPUSD was in quite an uptrend at that time and was approaching highs too but the major trend was up and there were no signs for reversal except that we knew that the correction should be coming which essentially was true and next day we hit tha correction trade.

Sometimes, when a price is moving exponentially higher and higher, I seem to get an awareness that "if something seems to good to be true, then it is time to get out".
In both cases, it just seemed that the rises had been too exponential. Call it "gut feel" or "latent experience", but whatever it is, I will trade on it. (Maybe I was just lucky !!!....LOL)
BUT as I said above, in no way, would I recommend that traders trade that way as a standard trading method.
Furthermore, even though I made nice profits from those two trades, the profits from my standard trading method tower over those profits...and it is MUCH less of an adrenalin rush...(which is not good for senior citizens like me)...LOL

Thirdly, in relation to the following:
Quote
Based on one of the posts you were still holding to this EURO trade in mid January at 1.2800's which was excelent for you. But what I do not understand how 50 pips trailing stops held you in this trade for so long. There had been retraces for much more than 100 pips during that run. That might be caused of my limited experience with trailing stops.
[quote]
I suggest that you re-read the anti-hedging strategy and you will see how it works so well in these cases.


Fourthly, regarding this point:
Quote
The last point about your remark regarding "targets". In your GBP trade, you stated that your were targeting 1.9500,

At the time that I went short the GBP at 1.9750, it seemed likely (under my standard trading method of looking for "round numbers", that 1.9500 might be a significantly strong magnet for the desk jockeys). Furthermore, even though I kept my position till it went below 1.9500, it was only because the trailing stop loss was not hit on the way down, rather than me "targetting" a specific number.

Finally,
Quote
I want to make sure that you do not misunderstand my intention here. My intent is to clarify your trading plan. More specifically, the deviation when you trade with major trend and when you trade reversals/corrections, how the trailing stops have worked and if some potential targets get you to change of any of the above parameters (entry point, trends, stop loss, trailing stops) or deviate from your trading plan
[quote]
No problems, I was not offended by anything in your post. I hope that I have answered your questions. If you need to know more, just ask away and I will try to answer as best that I can.

.
  • #67
  • Feb 15, 2007 12:51pm Feb 15, 2007 12:51pm
Jacko,

with your strategy do you consider "pyramiding" adding to your positions when the trade start going into your direction?

Thanks
tradeit
  • #68
  • Feb 15, 2007 3:53pm Feb 15, 2007 3:53pm
Thank you Jacko for you response!

Quote
Sorry about the delay in responding but I only travel past the FF site when I have spare time...

I do not spend a lot of time on the forums either…


I still have few questions that I would like you to comment on:

Quote
1. These trades were exceptions to my standard trading.
My standard trading pattern has been clearly set out here so there is no value in stating a standard trade. ((For example, as I type, the Euro is at 1.3140...If I wanted to place a trade right now I would... buy it at 1.3140...set a 50 pip stop loss...if I am stopped out (at 1.3090), I would wait for it to hit 1.3040...then (using the anti-hedging stategy), I would place a Stop Buy order at 1.3090... and wait for the trend to reverse and pick up my Buy order.))

I do not trade Euro so I do not know much of the history of trends and corrections. But it is quite possible that after stopping out and applying anti-hedging entry could result in a) additional 50 pip loss b) extended time until the trade is generated (possibly 2-3 weeks, I read today that Euro reached the highest price in 6 weeks). I know that you are a position trader and that you have traded been trading euro, but is this a little too long to wait for reentry?

Quote

Sometimes, when a price is moving exponentially higher and higher, I seem to get an awareness that "if something seems to good to be true, then it is time to get out".
In both cases, it just seemed that the rises had been too exponential. Call it "gut feel" or "latent experience", but whatever it is, I will trade on it. (Maybe I was just lucky !!!....LOL)

Point well taken. There is nothing wrong with those trades being great winners. LOL


Quote
I suggest that you re-read the anti-hedging strategy and you will see how it works so well in these cases.
My reference to your trades were pointing that trailing stops should have stopped you out of those trade and should not have kept you in those trades for the entire move. That is based on my limited experience how trailing stops work. Your comment to anti-hedging, I assume is in reference of reentry. I thought that you use anti-hedging strategy when you have been stopped out of the trade at a loss so you reenter at the point of the loss plus/minus stop loss as you described above. Did you imply that you also using anti-hedging strategy when trailing stops take you out too? Just do not see how you could have gotten back in these trades. Please check your comment as it was related to those 2 trades. Perhaps you meant something else. Please clarify.


Quote
At the time that I went short the GBP at 1.9750, it seemed likely (under my standard trading method of looking for "round numbers", that 1.9500 might be a significantly strong magnet for the desk jockeys). Furthermore, even though I kept my position till it went below 1.9500, it was only because the trailing stop loss was not hit on the way down, rather than me "targetting" a specific number.
I understand your view with targeting but I do not understand how you were able to stay in this trade with 75 trailing stop, it should have stopped you out. Unless I do not fully understand how trailing stops work (my platform does not support automated ts). I do see that there were 75 pips retraces way before we reached 1.9500.

Thank you again for explaining your trading strategy.

Best Regards
  • #69
  • Feb 15, 2007 11:30pm Feb 15, 2007 11:30pm
I just wanted to say that the trend is your friend and a rising tide lifts all boats etc. Nobody addressed to the original poster that one must identify positively that there is a trend and not the end of the trend friend. Also more money is made when you are first to see the beginning of a trend friend which means your are trading against the trend friend initially.
I prefer puppies as my main friend since the trend can bend and then you'll bending over and taking it up the smendz..
  • #70
  • Feb 15, 2007 11:40pm Feb 15, 2007 11:40pm
Quoting steinitz
I just wanted to say that the trend is your friend and a rising tide lifts all boats etc. Nobody addressed to the original poster that one must identify positively that there is a trend and not the end of the trend friend. Also more money is made when you are first to see the beginning of a trend friend which means your are trading against the trend friend initially.
I prefer puppies as my main friend since the trend can bend and then you'll bending over and taking it up the smendz..
This is a funny twist.

Friend is your freind as long as you are making money. If you are loosing money then you are at the end of a trend and trend is not your freind. But you could be making money against a trend. And then of course anti-trend is your friend.

Making money is the name of the game, it is just makes it easier making with a friend, whether it is a trend or not is irrelevant.

That was quite revealing. Thanks
  • #71
  • Feb 16, 2007 3:37am Feb 16, 2007 3:37am
I have an insights to share. Correct me if I'm wrong.

If you place your trade only in the direction of the major-trend (trends that is many months old) and time your entry using price action (candlesticks, etc) , you will be correct very often.

In my opinion, the reason this is the case is, long-term trend is a summarization of economic fundamentals. If the long-term trend is up, it means the fundamentals have been good (despite some negative news) for quite a long time and the fundamental traders (mostly hedgers, importers, exporters, businesses) have been buying that currency for a long time. Hedgers makes up at least 85% of the market, remember?

In other words, trades placed in the direction of long-term trend is strongly backed by fundamentals traders thus making each trade a high probability trade.

Hope this could be useful to anyone.
  • #72
  • Mar 4, 2007 9:52am Mar 4, 2007 9:52am
Quoting Tradeit
Jacko,

with your strategy do you consider "pyramiding" adding to your positions when the trade start going into your direction?

Thanks
tradeit
Jacko,

are you still around? if you are can you please respond to the above question
  • #73
  • Mar 9, 2007 10:37pm Mar 9, 2007 10:37pm
be friend with anyone / thing....

hey, why we dont do this:
let a group of people do trade in 1 account, and they too will create a trend....

if their trend match the market, all are winner.

eg 1 people limited to 1000, so a 50 people will use 50.000 in .
  • #74
  • Mar 30, 2007 7:39am Mar 30, 2007 7:39am
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
Every one of us would like to do this. But, it's like saying "just get the ball through the hoop". And we're playing against, or we hope, with, the Michael Jordans.

I'll invite sarcasm, criticism, and name calling, just to glean what positive comments others have to offer.

Please look at the chart below and tell me what the trend is. Looks like it's up overall, according to the "lower left / upper right" rule. But anyone who bought on the mid-Feb dip was stopped out or is still in the red, after stomaching one heckava ride.

Since early January, it's been going down, and is now in a pullback. And in early Feb, it broke the uptrend line, no matter how you drew it. Now you draw a new one on the new bottom early March, and it still says up. But you have the downtrend line off the tops. Some would say it's wedging, or a triangle -- sideways!

As you can see, I'm short.

I've struggled with this (trends) for some time. It's the most very basic skill a trader needs, yet, with any chart, you change the number of bars and the trend goes from up to down to flat, etc...

I don't have a 5-year old handy.
Attached Image
  • #75
  • Mar 31, 2007 8:00am Mar 31, 2007 8:00am
blueruby,

That question is not directed to me but I hope I can help. This is how my trendline for GBPJPY looks like. I drawed it in daily, but to make it easy to see, I changed to weekly. I take the trade using daily. Notice that this trendline is 7 years old lol.

Let's say you start trading it in 2005. You will only take long positions (yes, for 2 years, as long as the price do not "cross the TL and confirm its new direction"). During these 7 years time, price will dips, establish a support level and move up higher. Buy at the dips. What if there's no dip ? That can't happen lol. Price can't go up forever.
What if you entered and market drop further, hitting your SL ? Wait for the next support and buy again. After you buy, use trailing stop.

Backtest this and you will see something interesting.
Attached Image
  • #76
  • Apr 1, 2007 6:54am Apr 1, 2007 6:54am
Thanks, lugmanz, that's a good chart.

My question was directed at anybody, I should have said, "somebody please look at this..." so thanks again.

Since I posted that, I read somewhere again, "If you're not sure about the trend, move out to a longer timeframe. If you're still not sure, don't trade."

Anyone else? If it breaks the triangle to the downside, there are several thousand pips on the shorter term downtrend/possible beginning of longterm downtrend before it hits support.... or, wait to buy, watching all those pips go by until it hits support. Even after it does, you might wait weeks or months while it bounces, finally you go long, you'll need a very wide stop, and it might break through and head for the 130's again. That's forex.
I would rather get a system that would allow me to trade the GJ now than to wait a month or two for a trade.

If we look at the last time it ran up to this level, we could say it has already bounced off long term resistance.

Is this TA? Is it making it too complicated? Or would it come under the heading of greed/hoping?

Sorry to be such a pisser/moaner. I just have never read a thread that didn't have the gamut of opinions, and I have not yet read anything from one successful trader who really does what he says he does, or can even say exactly what he does. There are always exceptions, discretion, gut trades.

I will learn this and be successful, that is a fact.

It will take time. That may or may not be a fact, it might be easier than I'm making it.
Attached Image
  • #77
  • Apr 2, 2007 5:56am Apr 2, 2007 5:56am
blueruby,

You will not need to wait for months to get into the trade.
In the graph you posted, you will ride a solid downtrend when you change your bias to "Bearish". When should you change? Take a look at my chart.
It's a daily chart. The yellow line is your first bullish trendline.

When the price crosses the trendline, you stay bullish until you see the "confirmation of reversal". From that point (blue line) and onwards, you will only trade short position. After sometime, you can draw a bearish trendline. Stay bearish as long as you don't see "confirmation of reversal".

Hope that helps.
Attached Image
  • #78
  • Apr 3, 2007 12:48am Apr 3, 2007 12:48am
Quoting luqmanz
blueruby,

That question is not directed to me but I hope I can help. This is how my trendline for GBPJPY looks like. I drawed it in daily, but to make it easy to see, I changed to weekly. I take the trade using daily. Notice that this trendline is 7 years old lol.

Let's say you start trading it in 2005. You will only take long positions (yes, for 2 years, as long as the price do not "cross the TL and confirm its new direction"). During these 7 years time, price will dips, establish a support level and move up higher. Buy at the dips. What if there's no dip ? That can't happen lol. Price can't go up forever.
What if you entered and market drop further, hitting your SL ? Wait for the next support and buy again. After you buy, use trailing stop.

Backtest this and you will see something interesting.

Luqmanz,

I have just been reading some of your posts on the forum.
http://www.forexfactory.com/search.php?searchid=1333526


You are thinking like a rational and intelligent trader.

Good luck in your trading.

.
  • #79
  • Apr 3, 2007 2:15am Apr 3, 2007 2:15am
Quoting jacko
Luqmanz,

I have just been reading some of your posts on the forum.
http://www.forexfactory.com/search.php?searchid=1333526


You are thinking like a rational and intelligent trader.

Good luck in your trading.

.
Thanks for the compliment. I have long way to go. I have learned a lot from you and newbietrader. Thank you very much I owe you a lot.
  • #80
  • Apr 3, 2007 10:26am Apr 3, 2007 10:26am
I trade against the trend and I trade allot. two things that every book says not to do. but it works for me. Find something that works for you, devolop a system and stick with it. every strategy will have bad days, just like women.
Keep it simple stoopid....
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