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Attachments: Trend Following - A Complete Guide
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Trend Following - A Complete Guide

  • #41
  • Dec 18, 2010 12:47pm Dec 18, 2010 12:47pm
I just look at the charts. It takes a couple of seconds. Let's say the GBP/USD is in an uptrend. For parallel analysis, I'll take a look GBP/JPY, GBP/CAD, and GBP/AUD to see what they are doing. Then, for inverse, Ill check out the EUR/GBP. I will then do the same for the USD side checking lets say EUR/USD, AUD/USD, and then inverse USD/CHF and USD/CAD. It only takes as long as it takes to flip through the charts.


Quoting vijidas
As you mentioned you spend only 10-20 minutes a day analysing forex pairs. How do you manage parallel and inverse analysis within that time? Do you use some kind of forex dashboard with all pairs which shows strength & weakness of each currency? doing parallel and inverse analysis can be time consuming.
  • #42
  • Dec 18, 2010 12:52pm Dec 18, 2010 12:52pm
Quoting Micardo
Hi Vijidas,

I know what you mean ad I think that can actually be said for trading in general.

Looking at the chart you presented I would say the it is clearly in a down trend on that time frame. The chart is making lower highs and lower lows, so I would be looking to short.

However I also agree with you in the sense that I would only take this short now once the range has been broken, as it is currently consolidating and even though we favour a short trade, if the market breaks to the upside I would be comppletely willing to take that too.

Does...
Hello micardo,

yes it answers my question. I will pretty much do the same. My bias for this pair is short and will short it at 1.35 if price action and pair correlation agrees with it. I will look for longs at 1.32 with possible TP @1.35, 1.37 and 1.40. They are the area of interest for me.
  • #43
  • Dec 18, 2010 1:17pm Dec 18, 2010 1:17pm
Quoting brenzaj42
I just look at the charts. It takes a couple of seconds. Let's say the GBP/USD is in an uptrend. For parallel analysis, I'll take a look GBP/JPY, GBP/CAD, and GBP/AUD to see what they are doing. Then, for inverse, Ill check out the EUR/GBP. I will then do the same for the USD side checking lets say EUR/USD, AUD/USD, and then inverse USD/CHF and USD/CAD. It only takes as long as it takes to flip through the charts.
maybe I'm over analysing...that's why it takes me longer. for example: lets say USD is weaker...then to go long gbp or eur...i look at gbp/usd (and other gbp pairs) and eur/usd (and other eur pairs) and eur/gbp. naturally both eur/usd and gbp/usd will go up but to decide which one to go long i will look at eur/gbp to decide which one of them is stronger. lets say gbp is stronger then eur. then i will go long on gbp/usd rather then eur/usd. I will also look at nearest S&R resistance and which one has the likely chance of giving me more pips. It has been time consuming. I must be over analysing. Got to sort it out.
  • #44
  • Dec 18, 2010 1:27pm Dec 18, 2010 1:27pm
I understand what you are saying. I have a specific "trigger" that I use on any given currency pair. When I see that, I check the other pairs to confirm. If they are lining up on both sides, it gives me confidence to pull the trigger. I currently have 20 open positions. Some of those positions correlate stongly while others do not. For example, I have been short just about every EUR pair for awhile. However, I am long EUR/NZD. the trigger hit last week and it stood out and I wasn't sure if I should take it or not but I looked at other NZD pairs and they seemed weak so I took it. I am currently up about +160 pips. I wait for my "trigger" and then I take it on a case by case basis.


Quoting vijidas
maybe I'm over analysing...that's why it takes me longer. for example: lets say USD is weaker...then to go long gbp or eur...i look at gbp/usd (and other gbp pairs) and eur/usd (and other eur pairs) and eur/gbp. naturally both eur/usd and gbp/usd will go up but to decide which one to go long i will look at eur/gbp to decide which one of them is stronger. lets say gbp is stronger then eur. then i will go long on gbp/usd rather then eur/usd. I will also look at nearest S&R resistance and which one has the likely chance of giving me more pips. It has...
  • #45
  • Dec 18, 2010 2:38pm Dec 18, 2010 2:38pm
Quoting brenzaj42
I understand what you are saying. I have a specific "trigger" that I use on any given currency pair. When I see that, I check the other pairs to confirm. If they are lining up on both sides, it gives me confidence to pull the trigger. I currently have 20 open positions. Some of those positions correlate stongly while others do not. For example, I have been short just about every EUR pair for awhile. However, I am long EUR/NZD. the trigger hit last week and it stood out and I wasn't sure if I should take it or not but I looked at other NZD pairs...

good day to you and all others,

hm, im doing something like you are doing - i guess.

khm - im developing some system which has 7 currencies in general view. I use 5 EAs which have each about 8 scenarious. I look at different math indicators and in different time zones. I use ponders for decision making. Later on - I get summary of the results and this is how it looks in the attachement.

I was also selling EUR against every currency. Payed off. I have results for last 3 weeks...in the last week I was seeing more of EUR buying on every cross. EURGBP was 93% bought and went up by 1,7 % this week.

It is true, that last week was really dreadful for GBP. Loser on every cross.

My questions for you: How do you enter a trade? S&R?? what is your SL in pips? How long do you have your position open on average? your exposure? any other opinion and advise?
Attached Image (click to enlarge)
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  • #46
  • Dec 18, 2010 2:51pm Dec 18, 2010 2:51pm
I am about to head out for the night so I cannot respond for a bit but I just use two moving average crosses for enter and exit. I use 5ema and a 12ema. The key is it has to be a specific type of cross. I make sure it has a bare minimum of 100pips of room to move. Couple that with parallel and inverse analysis and you should have a winner. Timing is key as well, I will not enter until it starts to go my way in the main trading session. I only use a 100 pip stop. Trades will usually go for about 500-1500 pips. I try to make it as simple as possible. It works for me.


Quoting 21vs7
good day to you and all others,

hm, im doing something like you are doing - i guess.

khm - im developing some system which has 7 currencies in general view. I use 5 EAs which have each about 8 scenarious. I look at different math indicators and in different time zones. I use ponders for decision making. Later on - I get summary of the results and this is how it looks in the attachement.

I was also selling EUR against every currency. Payed off. I have results for last 3 weeks...in the last week I was seeing more of EUR buying on every cross....
  • #47
  • Dec 18, 2010 3:12pm Dec 18, 2010 3:12pm
Quoting brenzaj42
I am about to head out for the night so I cannot respond for a bit but I just use two moving average crosses for enter and exit. I use 5ema and a 12ema. The key is it has to be a specific type of cross. I make sure it has a bare minimum of 100pips of room to move. Couple that with parallel and inverse analysis and you should have a winner. Timing is key as well, I will not enter until it starts to go my way in the main trading session. I only use a 100 pip stop. Trades will usually go for about 500-1500 pips. I try to make it as simple as possible....

good night to you, sir
  • #48
  • Edited 6:53pm Dec 18, 2010 6:40pm | Edited 6:53pm
Quoting vijidas
In my personal opinion Trend trading is simple and easy to learn but it is not easy to trade. See attached chart:

what would you say is the current trend?

would you say it is downtrend? it could be uptrend and the current down move could be just a retrace of a big uptrend.

it is currently in 300 pip range. how will you trade it?

there are lots of factors to consider.

I hope micardo could give examples to help us understand.

so how would i trade the attached chart? I would wait for price to break out of the 300 pip range. If i'm a range trader...
If you use the fibs one option of interpretation could be like this:

Fib has reached two times at 61.8 (Daily Chart). So it could be that the market will consolidate in the next days, if so we could see a sideway movement - a range.

May be it could be a favored option to trade the range at M5/M15 and looking for a breakout outside the weekly triangle (#1232) or the daily 61.8 fib levels before going on with the trend and then coming back with the trades at the higher timeframes (H4/Daily).

If price is likely to stay within the range or breakout the range, this is where you really put speed of the market and momentum of price to good use in your analysis.

With lots of speed and strong momentum, the range will likely be broken. With little speed and weak momentum the range will likely hold and continue.

Kindest regards
FXcube
Attached Image (click to enlarge)
Click to Enlarge Name: EURUSD, Daily, Fib, 2010 December 18.jpg Size: 188 KB
  • #49
  • Dec 19, 2010 1:18pm Dec 19, 2010 1:18pm
Quoting Micardo
Hi Vijidas,

The secret is to keep your losses small enough so that when the big trend comes you make up all your losses annd then some. For example I have had a period where I had more than 10 trades in a row that have been mainly break even with one or two losses and one or two smaller profitable trades. All of these trades in total set my account back -0.5%.

So my losses are small enough so that when the big win comes it really takes care of these consolidation periods.
Two questions:

  1. When you enter a trade you dont have a profit target and thats fine .. but how do you set your stop loss ?
  2. How do you separate end of trend with just a simple momentary retracement?

  • #50
  • Dec 20, 2010 10:57am Dec 20, 2010 10:57am
ignore !
  • #51
  • Dec 20, 2010 11:04am Dec 20, 2010 11:04am
hi, after reading your thread (thanks for sharing your knowledge) i have been looking at AUD.CAD pair, on DAILY it has been on a LONG trend since June, then in Nov it has dipped and is rising again. i have the following analysis (can you comment):

On the attached i have drawn:

DAILY trendline which is on a LONG trend

a support and resistance:

Support at 0.9732
resistance at 1.0217

currently price is 1.0115 so i would await for it to pass the resistance price before entering.

If and when the price does pass resistance i would then read the candles and if they appear as "Bullish Engulfing - The bullish candle body completely engulfs the previous bearish candle body" as in 2nd attachment that would be confirmation right?

Thanks in advance
Attached Image(s) (click to enlarge)
Click to Enlarge Name: AUD.CAD.JPG Size: 68 KB
Click to Enlarge Name: AUD.CAD 4H.JPG Size: 70 KB
  • #52
  • Dec 20, 2010 5:24pm Dec 20, 2010 5:24pm
Quoting brenzaj42
I am about to head out for the night so I cannot respond for a bit but I just use two moving average crosses for enter and exit. I use 5ema and a 12ema. The key is it has to be a specific type of cross. I make sure it has a bare minimum of 100pips of room to move. Couple that with parallel and inverse analysis and you should have a winner. Timing is key as well, I will not enter until it starts to go my way in the main trading session. I only use a 100 pip stop. Trades will usually go for about 500-1500 pips. I try to make it as simple as possible....
can you give an example chart with these indicators in action for a better understanding? thanks
  • #53
  • Dec 21, 2010 11:43pm Dec 21, 2010 11:43pm
This thread has gone quiet. Any updates micardo?
  • #54
  • Dec 22, 2010 5:42am Dec 22, 2010 5:42am
http://l.thumbs.canstockphoto.com/canstock3695259.jpg
Never Ever Give Up!
  • #55
  • Edited 5:27pm Dec 22, 2010 3:26pm | Edited 5:27pm
at the start of the week i decided to try something i'd never done before

i flicked through all my br*kers pairs on a 240m with the intention of picking pairs i thought were trending nicely, i didnt overcomplicate or over analyse, i was simply looking for something that seemed clear to me, if it wasnt clear to my eyes, i quickly moved on

these are the 3 pairs i selected: http://www.forexfactory.com/showpost.php?p=4254173&postcount=281

i have been pleasantly surprised by the outcomes of these 3.

repeatable? i dont know, but it seems that of the successful traders, most have found a very uncomplicated way to trade.

i think there is an art to trading "simply", and wonder if it is a key to success

if so, i suspect trend trading is one of the royal roads to trading simply yet successfully
  • #56
  • Dec 22, 2010 7:18pm Dec 22, 2010 7:18pm
Hi Guys and Girls,

Sorry for not posting the rest of the strategy yet. I have been quite busy leading up to Christmas, trying to plat Santa etc. I don't have the time at this second to complete everything so I will endeavour to do it tomorrow evening. I will also answer any questions that I have missed.

I hope that is ok and you all understand.

Sorry again.
  • #57
  • Dec 23, 2010 5:27pm Dec 23, 2010 5:27pm
OK so we have talked about all of the tools that you need to make this work, well apart from trend lines but then, I guess trend lines need no explaining.

So as you know we are looking to trade in the direction of the trend and only in the direction of the trend, we primarily trade either the daily or the 4 hourly chart. We have a number of setups that we look for which are as follows.

Entries

1. At the beginning of a trend we trade the 1-2-3 reversal patterns as defined in post 4.

2. We trade pull backs in the trend to important confluence of levels (support and resistance, fibonacci, trend lines).

a) When price retraces to these levels we look for a 1-2-3 reversal on a smaller timeframe than the main time frame you choose. So essentially you are looking for a trend reversal of the smaller counter trend which forms the pull back.

or

b) When price retraces to these levels we look for candlestick reversal patterns on the main time frame

3. We trade trend line breaks in the direction of the trend. So you draw a trend line in for the pull back/retracement trend

4. We trade breakouts of congestion zones in the direction of the trend.

Stop Losses

You always place your stop behind the most significant level, so essentially the level which confirms that our entry was incorrect. If you are using a candlestick entry you would place the stop behind the signal candle. If you use a 1-2-3 for your entry you place it behind the most recent swing point.

Basically in all cases you are placing your stop behind the most recent swing. Essentially you want to exit once your setup is no longer valid. In all cases you should not really be risking more than 1% on any trade, and if you are trading more than one currency pair, you may look to bring that back to 0.5% risk.

The aim of this game is to control your risk, if you do that I promise profits will follow.

Take Profits

Now this is a little more tricky. This really depends on your personality, you basically have 3 options.

1. You exit at a set risk reward, so for example you take profit at 2 times your risk. If your stop is 100 pips then your take profit would be 200 pips.

2. You exit at the next area of support or resistance. So at the next road block so to speak.

3. You follow the trend and exit when you get a 1-2-3 reversal on the major timeframe. This approach takes some stones, as you will inevitably have to watch profits reverse on you, but can be a very rewarding way of trading.

You could almost say that options one and two are more of a swing trading approach whereas 3 is a true trend following approach. Unfortunately I cannot make this decision for you, everybody has their own preference.

For me, I am more likely to go for option three if I believe I have fundamentals on my side as well, otherwise I usually go for taking profits when I can get them. Anyway I guess you must be a bit bored of reading by now, so I suggest you go and take a look at some charts, and try to determine what you prefer.

If you have any questions, please feel free to ask.

Thanks
  • #58
  • Dec 23, 2010 5:34pm Dec 23, 2010 5:34pm
I hope you all understood all of that! If you have any questions I will do my best to answer them, although please bare with me as it is Christmas and my beautiful daughters would not forgive me if I don't pay them complete and undivided attention over this period :-).

I guess you would have gathered that I haven't given you a step by steo guide as to how to trade. I have done this intentionally as I believe you will be a better trader if you decide for your self what works best for you as oppose to having someone do it all for you (I may be wrong).

In any case, I have given you all of the tools and pointed you in the right direction, I am heppy to work with you from here to help you build your trading business plan.
  • #59
  • Dec 24, 2010 5:59am Dec 24, 2010 5:59am
They are all winners except for the 4th one. Simple but it works for me. I usually only take trades in the direction of the weekly chart but I confirmed all entries with parallel and inverse analysis. there is about 2200 pips off of this pair alone.





Quoting gh0stjpy
can you give an example chart with these indicators in action for a better understanding? thanks
Attached Image (click to enlarge)
Click to Enlarge Name: exp5.png Size: 55 KB
  • #60
  • Dec 24, 2010 12:51pm Dec 24, 2010 12:51pm
You hit the nail on the head.




Quoting PeterE
at the start of the week i decided to try something i'd never done before

i flicked through all my br*kers pairs on a 240m with the intention of picking pairs i thought were trending nicely, i didnt overcomplicate or over analyse, i was simply looking for something that seemed clear to me, if it wasnt clear to my eyes, i quickly moved on

these are the 3 pairs i selected: http://www.forexfactory.com/showpost.php?p=4254173&postcount=281

i have been pleasantly...
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