Trend Following - A Complete Guide | Page 6 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Is Grid Trading (combined trend following and counter trend) Profitable? 3 replies

Trend following or trend fading? 8 replies

Trend Following Experiment - GBPUSD 26 replies

Trend Following Experiment - EURUSD 80 replies

following the trend 2 replies

Attachments: Trend Following - A Complete Guide
Exit Attachments

Trend Following - A Complete Guide

  • #101
  • Dec 31, 2010 1:58am Dec 31, 2010 1:58am
Thanks brenzaj42.

Quoting brenzaj42
When I conduct parallel and inverse analysis, I am simply pulling up daily charts of related currency to see what they look like. For example, if I am planning on shorting EUR/USD pair, I will flip to multiple EUR daily charts to see if they are all in downtrends as well and if they are all up against resistance or have room to move. I will then check the daily charts for USD pairs to see if the USD is on the strong side of the trends. That is it. I will then enter either in Asia or most likely the Main session. Of course, a currency changes from...
  • #102
  • Dec 31, 2010 4:56am Dec 31, 2010 4:56am
Quoting brenzaj42
When I conduct parallel and inverse analysis, I am simply pulling up daily charts of related currency to see what they look like. For example, if I am planning on shorting EUR/USD pair, I will flip to multiple EUR daily charts to see if they are all in downtrends as well and if they are all up against resistance or have room to move. I will then check the daily charts for USD pairs to see if the USD is on the strong side of the trends. That is it. I will then enter either in Asia or most likely the Main session. Of course, a currency changes from...
It is actually as if you are in my mind :-)

When I conduct paralell and inverse analysis I too look at the bigger picture. I am not as concerned with the pip to pip movements, as obviously there is daily noise and volatility that has nothing to do with the longer term trend.

Everyone has to remember that the Forex market has many different players, it is not just speculators and as a result there will be many different motives for entering the market. A big corporation could decide to enter the market just to facilitate their trade or hedge some of their risk. This has little to do with trend following and as a result is nothing that we should be concerned about. It is just impotrant to know, as something like this could cause the best set up to go against you.

I hope that helps.
  • #103
  • Dec 31, 2010 5:25am Dec 31, 2010 5:25am
Great thread. Can I ask brenzaj42 about timing of your entries. You are assessing trend on Daily charts then you move to Hourly to find an entry correct? Or do you go even lower to 15M chart? And on this lower TF chart are you also looking for an identical ema cross with good angle or retracement or bounce off support or something else?

Thanks
  • #104
  • Dec 31, 2010 5:57am Dec 31, 2010 5:57am
You just described a little bit of multiple time frame analysis. The lower time frames feed the higher time frames so you can drop down to smaller timeframes to see what is going on. I personally just wait until either side of the currency pair is making a move then enter. Again, if I am shorting the eur/usd, I will wait until there is eur weakness or usd strength or both by checking once is asia session and once in the main session. My daily candles reset at 6pm est everyday so I check them at that time. I probably could just take them right at that point if that helps. I actually started that way years ago. It is just in recent years that I have tried to get a better price by waiting for a pullback in the asia session and then jumping in during the main session. BTW, for me the main session is between 630am est and 1030am est.



Quoting stevexyg
Great thread. Can I ask brenzaj42 about timing of your entries. You are assessing trend on Daily charts then you move to Hourly to find an entry correct? Or do you go even lower to 15M chart? And on this lower TF chart are you also looking for an identical ema cross with good angle or retracement or bounce off support or something else?

Thanks
  • #105
  • Dec 31, 2010 6:08am Dec 31, 2010 6:08am
OK so here are some of the first charts.

EURAUD has been in a serious down trend for the past forever. There are a few resistance levels that we would be looking for a bounce off of. Ideally we would want to see further weakness in the EUR/USD as well to really confirm a trade here, but is not necassary for us to take the trade.

GBPCHF has also been in a down trend and at the moment we are waiting for a retracement to any of the levels we identified on the chart. If we get a bounce around these levels we will be looking to short again.

EURJPY had previously threatened to break this down trend that it had been in for the past few years, but then continued its decent yet again. We are waiting for a retracement up to the levels identified at which point we will look to short again.

EURCHF has also been in a downtrend and although it has made a new low is in a sort of consolidation phase. If we do get the entry signal of course we will short how ever we will approach this one wiith caution.

EURUSD prior to christmas had been moving down due to the fears over the sovereign debt crisis in Europe. Over the past few days it has rallied but I personally can't see that much has changed over this period wo would be more than happy to short at the level identified in the charts should we get the signal.

USDCHF has been benefiting from the safe haven flows and would be short should we get the retracement up to the resistance levels. However if we were to short this and EURUSD we would be betting on both USD strength and weakness... does that make much sense? not really, but the setups are there. This would be a perfect example of where using inverse and praralell analysis would help us in deciding what to do here.

Generally speaking I do see further EUR weakness in the New Year, as the fears will remain over the debt issues in Europe. The question is what happens to the USD, the US also has its own problems. I am guessing that the data out of the regions will be slightly more positive in January due to the seasonal spending, so it will come down to where the markets have more confidence.

But having said all of this, the charts are our guides so if we get the entry signals technically we will have no choice but to consider them.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: 01-12-2010 11-39-37 EURAUD.jpg Size: 89 KB
Click to Enlarge Name: 01-12-2010 11-38-33 GBPCHF.jpg Size: 77 KB
Click to Enlarge Name: 01-12-2010 11-35-26 EURJPY.jpg Size: 92 KB
Click to Enlarge Name: 01-12-2010 11-33-20 EURCHF.jpg Size: 73 KB
Click to Enlarge Name: 01-12-2010 11-28-54 EURUSD.jpg Size: 86 KB
Click to Enlarge Name: 17-12-2010 11-26-35 USDCHF.jpg Size: 89 KB
  • #106
  • Dec 31, 2010 6:12am Dec 31, 2010 6:12am
Just a quick note on the periods trading... it is not unknown to see some counter trend moves during this period as the markets are not as liquid and hence it wouldn't take as much to move the markets as it would during normal trading.

What I am trying to say is becareful about opening trades that you want to hold for a few weeks before the new year as you could very welll get stung when the big boys come back into the office in the New Year and resume the pre-christmas period trends...
  • #107
  • Dec 31, 2010 10:44am Dec 31, 2010 10:44am
Hi Brenzaj,

Thanks for everthing you have posted on this thread. How many pairs do you trade per week on average?

Happy New Year,
C.
  • #108
  • Dec 31, 2010 11:09am Dec 31, 2010 11:09am
Are these charts daily or 4 hour?
  • #109
  • Dec 31, 2010 12:01pm Dec 31, 2010 12:01pm
Happy new year to all
  • #110
  • Dec 31, 2010 12:29pm Dec 31, 2010 12:29pm
I would have no idea of the average but at times I have been in over 20 trades while at times in only a few. Whatever is trending, I want in. I am in these trades for days, weeks, even months. The longer I can hold on the better.




Quoting calbracht
Hi Brenzaj,

Thanks for everthing you have posted on this thread. How many pairs do you trade per week on average?

Happy New Year,
C.
  • #111
  • Dec 31, 2010 3:41pm Dec 31, 2010 3:41pm
Hi Brenzaj, Thanks for sharing your exceptional insights into trend trading. You mentioned you use the 5/12 ema cross. Is there a reason for these numbers; such as they work better than others? It just seems to me a 6/12 cross or a 5/10 would be more logical.
Thanks also to Micardo for this informative thread.
I have taken Micardo's advice and tightened by stop loss from 250 to 200. However, this is just an emergency stop in case the price runs against my position when I am not watching. My real stop loss is mental; and usually a trend break of the daily trend line. Also, I trade without a take profit.
Happy New Year and Happy Trading to all. http://cdn.forexfactory.com/images/icons/icon7.gif
  • #112
  • Dec 31, 2010 8:21pm Dec 31, 2010 8:21pm
Brenzaj42 and Micardo, did you ever look at pipEASY's thread (building an equity millipede)? Totally changed how I trade for the better and from your posts would seem to be in line with what you do. Not to detract from your material here but talk about complementary in a good way !
  • #113
  • Dec 31, 2010 11:31pm Dec 31, 2010 11:31pm
Quoting Micardo
....
USDCHF has been benefiting from the safe haven flows and would be short should we get the retracement up to the resistance levels. However if we were to short this and EURUSD we would be betting on both USD strength and weakness... does that make much sense? not really, ....
Actually, it makes sense. Because if you short EURUSD and USDCHF, you are synthetically shorting EURCHF which has been in downtrend for a while. But instead of taking these two trades, you can only take EURCHF short trade.

Regards,
  • #114
  • Jan 1, 2011 7:38am Jan 1, 2011 7:38am
Quoting Blackeagle
Actually, it makes sense. Because if you short EURUSD and USDCHF, you are synthetically shorting EURCHF which has been in downtrend for a while. But instead of taking these two trades, you can only take EURCHF short trade.

Regards,
Hi,

Thanks for your input. I understand what you are saying about the synthetic but don't agree that is the only way to play it. I believe it is ok to bet on Euro weakness in which case you could take short eurchf and short eurusd without exposing yourself to usdchf.

But a valid point none the less and something we really welcome on this thread.

Healthy, intelligent discussions will only benefit everyone :-) so please keep it coming.

Happy 2011!
  • #115
  • Jan 1, 2011 8:32am Jan 1, 2011 8:32am
I have opened an account @ fxdialogue. Is it really worthy? I am new comer to forex trading. I have known that they are offering many things like low commissions and spreads as low as 0 on professional accounts But I need more info. I need helps from the experts
  • #116
  • Jan 1, 2011 9:32am Jan 1, 2011 9:32am
I have always used the two moving averages because I feel they work best for me. I am not sure what why the ones you mentioned would be more logical. I would like to hear why, really there is little difference between the three. It is just there as a visual aid to me. I guess to each his own.



Quoting jerrycollie
Hi Brenzaj, Thanks for sharing your exceptional insights into trend trading. You mentioned you use the 5/12 ema cross. Is there a reason for these numbers; such as they work better than others? It just seems to me a 6/12 cross or a 5/10 would be more logical.
Thanks also to Micardo for this informative thread.
I have taken Micardo's advice and tightened by stop loss from 250 to 200. However, this is just an emergency stop in case the price runs against my position when I am not watching. My real stop loss is mental; and usually a trend break...
  • #117
  • Jan 1, 2011 3:00pm Jan 1, 2011 3:00pm
Hi Brenzaj, Thanks for the reply.
Well, my thought on moving averages is this (and it quite well may not be correct): If we are comparing two moving averages on the daily, I would for example compare the average for the last week against say the last 2 weeks. Since the week is not exactly 5 days long, I might use 11/22
(5.5/11). However, to be real practical I was expecting an answer similar to yours: Namely your past experience indicates the 5/12 works best.
I suppose the correct thing for me to do is to set up different ma's and compare their crosses with the historical price action.
To continue my logic, I would expect a 48 and a 96 ma to work better than 50 and 100; because they divide evenly into our 24 hour system. However, since everyone just uses the 50 and 100, it is probably a self-fullfilling prophisy that they will work the best.
Happy New Year to everyone! http://cdn.forexfactory.com/images/icons/icon7.gif
  • #118
  • Jan 1, 2011 6:05pm Jan 1, 2011 6:05pm
I use 5,10 ema as a way to monitor trends within the trend. For example let's say a pair is trending down and I've been taking shorts on the way down. If the 5,10 ema crosses against the daily trend then I stop taking trades and monitor. Sometimes when this happens the pair moves back up to the top of the channel and then I look for a bounce off the downtrending TL. I don't take trades off the EMAs however.
  • #119
  • Jan 1, 2011 8:33pm Jan 1, 2011 8:33pm
Quoting brenzaj42
When I conduct parallel and inverse analysis, I am simply pulling up daily charts of related currency to see what they look like. For example, if I am planning on shorting EUR/USD pair, I will flip to multiple EUR daily charts to see if they are all in downtrends as well and if they are all up against resistance or have room to move. I will then check the daily charts for USD pairs to see if the USD is on the strong side of the trends. That is it. I will then enter either in Asia or most likely the Main session. Of course, a currency changes from...

what is parrallel / inverse analysis ? can u give an example ....
  • #120
  • Jan 2, 2011 1:36am Jan 2, 2011 1:36am
Hey WhatFX,

There are some comprehensive videos on YouTube. You might want to check it out.

Jon
0 traders viewing now