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  1. #1
    Administrator Martin Kay's Avatar

    The Trend is your Friend Strategy - How to catch the Trend !!!

    Hi guys, Bogdan with another great review - 3 ways to catch a Trend: Japanese candlesticks, Divergence and Fibonacci.

    Originally posted by Bogdan G. For the full strategy review click here.
    The Conclusion

    The examples above are meant to illustrate the power of the trend and this is more than just a strategy; I would call it a way of looking at trading and making sure that we are always riding the trend. Then, the exact entry is somewhat secondary because we can take an entry signal from any reliable tool and we are not limited to the tools presented here by me. I merely tried to exemplify the saying The trend is your friend and show you what exactly that means. Once you stop trading against the trend and just go with the flow of the market I am confident that your track record will greatly improve.

    What do you think?? do you have another strategy to catch a trend? let us know

  2. #2
    Senior Member Grae's Avatar
    The trend is a great way to trade. I actually put a lot of weight on trends because they are purely based on price action. I usually combine my analysis of trends with time frame confirmation (1 day/1 week time frames) and resistance and support areas- meaning if your trend is at either, you may want to be careful if you are freshly entering into a trade.

  3. #3
    M.J
    M.J is offline
    Veteran Member M.J's Avatar
    Confluence is always helpful in forex.
    But here I dun agree with "trend line" method. There can be many reasons and most important of all is there is no defined way of drawing trend lines. It is not as easy to draw trend lines as u have shown in examples. Instead of trend lines, I would prefer to use MAs for this purpose. MAs, with fibs is a good combination.

  4. #4
    Master Member Bogdan G's Avatar
    Quote Originally Posted by M.J View Post
    Confluence is always helpful in forex.
    But here I dun agree with "trend line" method. There can be many reasons and most important of all is there is no defined way of drawing trend lines. It is not as easy to draw trend lines as u have shown in examples. Instead of trend lines, I would prefer to use MAs for this purpose. MAs, with fibs is a good combination.
    I agree about MAs and Fibs, but the idea behind the article is not so much focusing on how to draw a trend line but rather how to recognize the prevailing trend and capitalize on it by using a tool (it doesn't have to be one that I talked about). Many guys don't really understand what "the trend is your friend" really means and I wanted to give clear examples of that.
    If it's not easy to draw a trend line then...there is NO trend line. A trend line should be intuitive to draw and easy to see. If the trader cannot connect the highs or lows because the trend line pierces through them, then they simply should not draw it because it's not reliable.

  5. #5
    Senior Member Grae's Avatar
    Click image for larger version.

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    Trendlines are a feature in many charts. THE MAIN CRITERIA IS TIMEFRAME+SUPPORT/RESISTANCE/PIVOT LEVELS.
    As you can see from the trendline, this is a great way to trade. You know when your predictions are within technical possibilities or off.

  6. #6
    M.J
    M.J is offline
    Veteran Member M.J's Avatar
    Quote Originally Posted by Bogdan G View Post
    I agree about MAs and Fibs, but the idea behind the article is not so much focusing on how to draw a trend line but rather how to recognize the prevailing trend and capitalize on it by using a tool (it doesn't have to be one that I talked about). Many guys don't really understand what "the trend is your friend" really means and I wanted to give clear examples of that.
    If it's not easy to draw a trend line then...there is NO trend line. A trend line should be intuitive to draw and easy to see. If the trader cannot connect the highs or lows because the trend line pierces through them, then they simply should not draw it because it's not reliable.
    Yes as an example, it was perfect. Actually I have seen many traders finding it difficult to manually draw trend lines. They cannot connect with correct highs and lows. The problem is they dunno concepts of trends within trends, higher highs, highest highs, lowest lows etc.

  7. #7
    Master Member Bogdan G's Avatar
    Quote Originally Posted by Grae View Post
    Click image for larger version.

Name:	GBPUSD.jpg
Views:	328
Size:	99.0 KB
ID:	4

    Trendlines are a feature in many charts. THE MAIN CRITERIA IS TIMEFRAME+SUPPORT/RESISTANCE/PIVOT LEVELS.
    As you can see from the trendline, this is a great way to trade. You know when your predictions are within technical possibilities or off.
    Indeed, the main criteria is S/R. That splits into 3 categories:
    1. Horizontal S/R - pivot levels, Fibs, normal S/R zones where price bounces and lines, horizontal channels/tunnels
    2. Diagonal S/R - trend lines and diagonal channels channels (like the one you have in your picture)
    3. Dynamic S/R - moving averages
    Exactly how you say, these help the trader to see if his/her "predictions are within technical possibilities or off". This is a very good way to put it. It helps us see the big picture.
    All the best

  8. #8
    Master Member Bogdan G's Avatar
    Quote Originally Posted by M.J View Post
    Yes as an example, it was perfect. Actually I have seen many traders finding it difficult to manually draw trend lines. They cannot connect with correct highs and lows. The problem is they dunno concepts of trends within trends, higher highs, highest highs, lowest lows etc.
    Oh, you are very right: many traders dont know what a trend line is and how to draw it manually and higher highs, higher lows etc. is foreign language to them. That's why after the opening paragraph I gave the most simple explanation of a trend that I could think of, accompanied by self explanatory pictures. There will be of course people that will not understand even that explanation...and now the dreaded statistic that's all over the internet comes to my mind: 95% of traders fail. Now why is that? Maybe because they cannot understand a basic, simple explanation of the main principle behind trading anything with a chart. I think those are the people that will get suckered in by get rich quick schemes and martingale based strategies.
    Hope we can help some of them to understand the basics

  9. #9
    Master Member vinayakm's Avatar
    I supposed I can build a trading system around Fibonacci, Japanese candlesticks and Divergence and backtest it? Does this work with binary options too?
    The only thing I have to add here is that we have to beware of trading ranges when looking to go with the "trend is your friend" strategy.

  10. #10
    Senior Member Grae's Avatar
    Quote Originally Posted by vinayakm View Post
    I supposed I can build a trading system around Fibonacci, Japanese candlesticks and Divergence and backtest it? Does this work with binary options too?
    The only thing I have to add here is that we have to beware of trading ranges when looking to go with the "trend is your friend" strategy.
    Normally, I don't automate my platform on MT4. I just read. I actually have a friend who did some automated trading, and sometimes got 80% success, and sometimes no success. Have you had great successes?

    Trading Ranges- Do you mean like in between support and resistance, after which the trend reverses or continues?

    Kind regards.

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