So you have started to trade and you have a strategy for stock trading that is your own. You’ve taken technical analysis training course and after some consideration you’ve deciding on trend trading for the style you prefer .
You’ll definitely find trend trading a strategy that is attractive . Take a look at charts and you’ll see those trending patterns jump right out . You get excited about catching a trend in the beginning and riding on through the conclusion of the trend many months in the future. Wealth beckons, success is on your doorstep !
Trading isn’t so easy in reality . You get in on a trend – maybe you are late or maybe you have managed to enter near the beginning of a trend , but you do make it on board . As your predictions begin coming true and you are in this trade, you get a small profit . Then a strong day comes along and then the market stops dead when resistance is hit by the stock. You tell yourself that you can’t make the whole move in a day and there is more ahead and so you add to your position . The market opens the following day, goes nowhere for a while and then quickly heads south . Since you’ve added to the position you were in you head back to break even fast and once you have the orders in place, you have already lost money. What happened ? How could you have know beforehand that the trend wouldn’t go on and that the profit should have been taken when you saw that pause after the strong open?
Here are several tips for trading that will tell when a trend will stop and when it will continue . If you use the tips along with the technical analysis training you will be well ahead of the game .
First of all : go with higher time period charge when setting targets; look for areas where resistance and support are logical to know when the market is going to stop or start.
If you do not know how to predict where future areas of support and resistance exist , or within your trading are unsure of how to coordinate your time frames , then take a quality technical analysis training for some help . Drummond Geometry is one of the best but a variety of valid schools of thought exist .
A tool is another element that you need with which to make judgments about the strength and robustness of a trend . Resistance or support will be broken through by a strong trend and when a point or resistance or support is hit by a weak trend it will go into congestion or stop or it will reverse and move in the opposite direction . If in the analysis tool kit you have the perfect tool you’ll be able to figure out which action is more probable ; you’ll have to wait and see without the right tools , and you have a high possibility of getting disappointed.
You need to use momentum tools to appropriately measure this and apply the tools to a timeframe smaller than that of the trend you are currently trading … to make it plain if the daily chart is what you’re trading , try to pick the low or the high with the trades , then to support the decisions you make intraday, you look at the hourly or half hour charts.
We’ll talk about this more in the second part of this technical analysis training series.
