Trend Following - A Complete Guide

Great thread. Up to about page 11 at the moment Trends have always been an interest of mine so this sheds more technical light on it all.

Thanks Micardo.

Hi Everyone,

Just thought I would pop in to say hello and give you a few setups I am looking at.

AUDUSD has been moving aggressively upwards for the past week and it doesn’t look as though the momentum is going to let up anytime soon. However we are near the highs so we need to be mindful when approaching these levels and think about exiting early if the market starts moving against us.

EURAUD had been trending up until the end of last week and has since been retracing. It is now at a previous level of support and the 50% fib level. If we get a breakout from here it will be quite a strong signal considering the level it is bouncing off of.

EURNZD is pretty much the same as the EURAUD.

EURUSD has been moving upwards but stalled today. A setup hasn’t presented itself yet but I will be watching this closely for an opportunity to buy.

GBPUSD has just broken out of the range I have been speaking about over the past few weeks. It is now consolidating near the highs so if we get a break to the upside I will be buying it.

Of course please don’t take any of this as trade recommendations, it is simply a heads up. Please do your own research and draw your own conclusions.

If you have any questions please let me know.

Micardo

Hi All,

I know the thread is quiet but I hope there are still some people benefiting silently in the wings...

Just thought I'd drop by to see how everyone is doing.

I hope you all caught the moves over the past few weeks!

Happy trading!

How are you?
We missed your post.
Maybe we will organize some webinar at weekend?

Hi Ihor,

Sorry I have been so busy, it is ridiculous. It always happens when I make a conscious effort to contribute something meaningful :-)

I will try to do better in the future.

Regarding the webinar I was advised that this would probably look like trying to solicit business to the rest of the community so have shied away from doing another one.

If I can get permission from the FF moderators I will do one, else I will have to find an alternative way of giving you guys the info you want.

I will keep you updated.

Speak to you soon.

Thanks

Hi Micardo,

Thanks for all your efforts. You have a great thread. I just found it and did not have a chance to see your webinar/skype session.

For the interest of latecomers, it might be more efficient for all if you just post a video or two and it can be a reference, available anytime. This way, you won't have to keep repeating yourself and you can do it at your convenience. Once the video is made, others can watch it whenever they have time and it will always be there for future readers.

Thanks

Hi,

I like this trading idea and it would be great to talk about some specific trading opportunities with other traders.

For instance I see the Yen getting weaker in the long run against the Dollars. I am waiting to shorten the Yen against the AUD or CAD. Right now it looks a bit over extended, so the Yen might get stronger sometime soon and this might be a opportunity to go short.

What do you think?

Hi MikeNYC,

I completely agree with you. The Yen is definitely a short in the medium to long term. These earthquakes have done nothing for their economy, although in the short term we may see some strength on the back of repatriation flows for the rebuild.

But we have to remember that much of the Yen strength was due to the unwinding of the carry trade and the so called flight to safety/quality. So with many nations now raising or talking of raising interest rates the Yen will again become the funding currency. We believe that the real catalyst for the Yen weakness will come when the US eventually talks of its recovery and raising rates, this will then cause the USD/JPY to rally and with it will push the other crosses further.

If we look at what has happened with the AUD/JPY and EUR/JPY over the past few weeks we get a sneak peak at what is to come from the USD/JPY.

Also if you look at the pre-crisis highs for all of the Yen pairs you will see how far the Yen has actually come and hence where it has the potential to go back to.

If ever there was a clear medium to long term trend this is it! We have sold some Yen already for this very reason and are willing to hold until the real weakening takes place. We will also continue to move in and out of these pairs on shorter term technical plays.

I hope that gives you some insight as to what we are doing right now.

What are your thoughts on this?

Micardo

Hi Stimulus,

Yes a few people have asked for this so I will endeavor to make a video or a series of videos shortly on this (assuming this is ok with the FF admin team).

Any requests on specific content?

Thanks

Micardo

Hi Micardo,

It might be nice to do a video on your trading process from start to finish on a trade sequence (How you determine the trend, entry methods, SL management, and exits).

Thanks!

hi

i second this

Hi Micardo,

Thanks for the detailed answer, which helps to get an idea of the yen pairs.

I am still sitting on the side lines and waiting for an oportunity to shorten the yen.

Why I think the yen will get weaker and weaker? My argument is based on fundamentals mainly. The Japanese economy in general is not in a good shape, the BoJ has no choice, they must print more and more money. How else could they stimulate the economy. While in the US we are discussing QE II or III , in Japan they are discussing QE # 20 ...?

Another fundamental data I consider is the demographic situation which is a problem in most industrialized countries, but especially in Japan. The Japanese population so far was a reliable invester into bonds issued by BoJ. But now, the population getting older and older, who will replace those buyers? The older, non working population is, of course, not interested in buying treasury bonds.....

Thanks for pointing out the carry trades. But are carry trades not going two ways usually? Japanese could have an insent to sell yen and invest into those currencies now raising interest rates ...

I am watching closely CAD-Yen, waiting to go long on this cross.

Another pair that looks interesting to me right now: EUR-USD. Trading right now at 1.4927. Was 1.4500 the top? Is the medium term trend south?

Good luck, good trading !

-Mike

This is really a great thread! I have finished all 21 pages, and I have a question.

Say on the daily chart, EUR/GBP has been trending up, and then it started to heading south for a few days, how do you know this is a retracement or a start of a new trend (i.e. downtrend)?

I find it pretty hard to identify the entry point during a pull back such as the scenario described above, sometimes when I drop to H4, it makes things worse, as the price action will be zig-zaging, so I don't know whether it is just a retracement or a new trend starting.

Hope someone can enlighten me on this, thanks!

I was trying to send this to you privately, but i wasnt able to. I really do not want to appear disrespectful by posting a link to another thread on this site. But the private messaging option in your profile has been disabled, micardo. Anyways, cindyxxxxx is starting a fundamental thread, if you are interested:

http://www.forexfactory.com/showthre...=1#post4620300

pheww, just read the entire thread in one afternoon, definitely a good read, very useful gems of wisdom in here for trading.

For those of you who love trend following, I would also recommend checking out the turtle system, made by one of the greatest trend follower out there, (Richard Dennis). The system rules and concepts is free now, and can be found online with simple Google search.

I see many of Micardo's concepts here are very close to turtle trading concepts, which is to catch the few home runs a year, while keeping your losses small.

micardo, if you don't mind sharing, what is your win/loss percentage? one of the psychological problems with true trend follower is that they often take many small losses, and the winner could be very illusive. using your method, 123 reversal, does the entry signal usually yield winners?

thanks, keep up the thread guys, this one has the potential to be the J16 of trend following.

Thank you Micardo for the really great thread and clear explanations.

The material on parallel and inverse analysis was also very helpful.

If you choose to do another webinar, diamonddbw is able to make good recordings.

Hi, I'm surprised that there are such generous people who are prepared to share such information. Peolple that I have approched and have better knowledge then I do,are selfish. Thanks a lot,this made me grow tremendously. Genarations and generations will reap from this.

Thankyou, keep it up!