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Best trend indicator!


forexb

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Hi Gyverd,

 

That was a great video :)

 

It makes trading look very easy and essentially it is when stripped down to the bare basics like that.

 

The only tricky bit is controlling our own emotions.

 

Phrases like "we just wait for a pullback" are easy to make when looking at a historical chart, however when trading in real-time we've no idea of how far that pullback will go before moving again in the direction of the trend. If we get in too early and the pullback is a big one then we're going to get nervous and probably exit just before the trend resumes.

 

Some folks will also trade the breakout of a new high or new low and then start to nervous when the (inevitable) pullback happens possibly causing the same exit from fear just at the wrong time.

 

Even with these potential flaws taken into account, just simply following price action in trending markets in this way should turn out nicely profitable.

 

If highs and lows aren't exceeded convincingly then we can assume we're probably in a ranging market. As soon as we see a bounce off the high followed by a bounce off the low or vice-versa -then we can stay out of the market if we're only interested in trend trading - or we can assume that the ranging will continue and trade from high to low or low to high until one of them is broken indicating that we're back in a trend.

 

[edit] The candle pattern formations explained in the earlier video here, show nicely when the optimum time is to re-join a trend after a pullback:

 

http://www.forexforprofits.com/blog/?p=1

Edited by soundfx
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