Trend Trading...Jacko

I am a Trend Trader

EVERYONE SHOULD TEST OUT THIS VERY UNUSUAL AND RARELY USED STRATEGY;

1. buy/ sell ONLY in the direction of the major trend and
2. buy/sell on dips.(Use support lines to guide you as to price...also "round" numbers ... I also use the 50% Fib ratio..)
3. bank your profits

Firstly, how do you know what the trend is?

DETERMINE THE TIME FRAME THAT YOU WANT TO TRADE.

1. If the graph on the chart starts in the bottom left hand corner and ends in the top right hand corner, the market is going UP.

2. If the graph on the chart starts in the top left hand corner and ends in the bottom right hand corner, the market is going DOWN.

3. If you are still confused, print it off and show it to a 5 year old...they will get it right EVERY time...LOL

The trend is the BEST friend you will ever have in the Forex market.

When you trade with the trend, even if you make a mistake, the market will get you out of your problem....If you make a mistake and you are fighting the trend ...YOU ARE STUFFED, BIG TIME !!!

Secondly,I think the round numbers (1.2900...1.3000...etc) are valuable. I only use minimal numbers of trend lines and the ONLY Fibonacci number I use is the 50% number....
That's the limit of my T/A...

KISS = Keep It Short and Simple
Note: I do NOT use any moving averages (or any other of the fancy measures). They are historical numbers!!!

The reasons that I use only Round numbers, trend lines, and the 50% Fib number is that the big players ALL use them. The more complex you make your trading parameters, the less number of people will be using them.

Forex is one of the most "trendy" markets. That is, it trends MUCH stronger than say metals, oils etc in futures markets. The pair that are the strongest "trend" market is the Euro/USD. Trending markets are soooo much easier to trade than choppy, volatile and erratic markets

Thirdly, Slow down... this market will be here for the rest of your life...
DON'T BET YOUR BANK...

It is better to get rich slowly...than to go broke spectacularly fast.

Fourthly, A much wiser man than me once said that "If you find yourself in a deep hole, then stop digging"

Do NOT throw good money after bad money...stop and accept the loss... then clear you head so that you can see more clearly...

You should either

1. Close out the trade, and let the market go up/down....but after the market starts to retrace, then put your "short"/"long" position back on at exactly where you closed it out. This ensures that you get back into the trade on the way down (the Jacko "alternative method" to hedging) or

2. Close the position and take the loss. Then look at getting back into a "good" trade next time. This market will be here long after you and I will be dead, so there is no need to rush in and try to get all your money back in one day.

Fifthly, the is a tendency for newbies to "PANIC" when the market goes a little against them This is due to:
1. Probably scared to lose money
2. Probably undercapitalised
3. New to industry....therefore probably uncertain about your own abilities
4. Unsure that the trend lines, 50% Fib line and "round numbers" are as reliable as they are in practice.
4. Probably inexperienced in business and investment from a practical aspect
5. Probably unsure who to talk to for guidance

There is a solution to all the above...... It is called "old age"........LOL

Finally, you ask why I prefer to use the longer term trades. The answer is that the shorter the time period, the more you are gambling and punting on tiny movements. The smaller the time frame, the less they will follow the trend lines, Fib numbers and "round number" rules.
The longer the time frame, the stronger will be the trend lines etc

Also, short term trading is emotionally much more draining.

Just some additional little things that I have remembered that may be of assistance to anyone looking to position trade:

Firstly, don't over-trade. Some people here seem to want to bet on every tic. The thing that kills new traders is the "wild punting" on everything that moves two ticks.

Secondly, stop thinking that you have to "outsmart" the market.
You don't have to..this business is very easy if you leave your brain at the door....just follow the trend = follow the money =going with the flow = barking with the big dogs.
Stop thinking that "it can't be that easy".......it is!!!

Thirdly,, you have to detach yourself emotionally from the money...that is the hard part...stop seeing it as money, and look at it as numbers.
Also, don't play with money you can't afford to lose...or alternatively, put the money aside and tell yourself that it is already lost. (You MUST detach yourself from the money

Finally, I am not saying anything different to what all the good trading books say...but it is amazing that every newbie wants to "take on" the market and then wonders which express freight train flattened them (and destroyed their trading accounts).
Most people are trading for the adrenaline rush rather than the boring concept of just maximising profits

The Forexmarkets are arguably the most "trendy" market there is, especially the Euro.

Once a trend is in place, it takes a lot of power to reverse it. Take a look at the weekly charts. This current "long" started back in early Dec 2005 at approx 1.1650. (nearly 1700 pips from where it is now) It had a relatively "minor" correction from approx 1.3000 to 1.2500 before continuing on to where it is today.

Even more strong evidence for the power of the trend is that the above "long" is part of an even stronger "long" from 0.8363 from July 2001.

Price does not like support or resistance levels. It mostly tests them and then moves away quickly. You’ll rarely find much price action in the vicinity of the line. If price is hanging around a support or resistance level, it’s likely to break in the opposite direction.
(For example we know that professional traders love round numbers to target...it brightens up their dull day to push and cajole the market to a target number. Now Euro/USD 1.3000 is the roundest number there is around those levels, so the pros have gotta be saying that the big game in the industry is to now grind and push the market to 1.3000. After that they don't care, they have had their fun...and thats why a market will whip and drop/rise dramatically straight after the target has been hit).

Smart Money is the Central Banks. They actually determine the trend by sheer weight of money. (Central Banks turn the long term currency markets to accomodate the relevant government's trade requirements). Then following them are the huge hedge funds.