True Trend

Forex Trend Indicator

True Trend Indicator

How to keep yourself in a trade for the entire move of the trend.

Hello Jordan,
 
I do see that you look at both the True Trend and Stochastic’s to give you an idea of the strength or change of the current trend, however as you mentioned below – isn’t it wiser to sell rallies on downtrends and buy pullbacks on uptrends. I do see that the play below did work out nicely for a 100+ pip gain, however isn’t that going against the general rule of sticking with the overall trend. Trend being defined in layman’s terms of beginning on the top or bottom left-hand side of your screen and end on the diagonal opposing side (higher or lower highs and lows)? I do see that on the daily chart the GBP was still on an uptrend as defined by one, however on the 4H, we see price broke thru the bottom of the channel to make a lower low of 1.5801.Depending on what happens in the next 8 or so hours it appears that the Pound might be making a head and shoulder’s pattern on the right side and could be ready for a fall from this morning’s high of 1.6069. If that is in fact the case, then your current long’s might be in jeopardy. Your input is much appreciated.
 
Sincerely,

Marvin

True Trend indicator

Hi Marvin,

We are only buying pullbacks in uptrends and selling rallies in downtrends. However, as a trend trader the first thing that you need to do is define the trend and we define the trend as by being an uptrend when the True Trend is positive and is a downtrend when the True Trend is negative.


True Trend = determines the greater trend of the currency pair in place.


At this point in the trade if the GBP/USD were to reverse (which could happen, as a rule of thumb we never pretend to know what will happen but rather always know we have no idea about what will happen) out stop loss has already been set to break even (entry point) once the trade met our criteria to move the stop loss to the break even point. It is a free trade.

That very well could be a head and should pattern developing as well as it is conflicting with many other indicators, candlestick formations and other chart patterns however that is always the case in trading – no matter what setup a trader is looking at there are always several conflicting signals on that time frame and from time frames as well.

  1. We always and only trade what is on our charts on the time frame we are trading and according to our trading plan.
  2. We never pay attention to any news event being price always prices everything in and we are trading and reacting to price.

There is a chance that right now a head and should pattern is building but the neckline has zero slope to it and it looks more like perhaps support off of the week long base built from May 21st to the 28th has held as support. Truth is I have no idea and anyone who tells you they do probably is not a profitable trader over the long term. You just cannot approach trading in a manner where you think you are smarter than the market.

Along with our entry and exit rules we place a high importance on our money management. Our position sizes and risk/reward ratios. If a series of trades stop out our loss is minimal and because of the high risk to reward we are using on each trade (ranges from 2:1 to great than 9:1) we know it only takes a couple of winning trades to recover from any draw down. In other words, we expect to have losses and our trading plan is set accordingly.

To sum it up, I have no idea what is going to happen in the markets ever so I am just following my trading plan! All of the work went into developing the trading system. If you are not trading a well developed plan you are trading subjectively all the time (which is okay, if that is what you choose).

Much peace,
Jordan



Subscribe to these updates by email or rss feed here.
You can also follow me on Twitter here.


Comments on this entry are closed.

Previous post:

Next post: