Thread: Trend Trading

Originally Posted by ;

Hi,

The EUR/USD appears like it's about to shut higher than it has closed since early May. Should this happen then will be a new four and a half month high that is where (based on my tests) new highs and lows begin to become pretty significant (statistically speaking). Higher highs and lower lows really begin to matter around 4 to 6 weeks.

Big and sudden price movements are also statistically significant and also the last large bearish weekly candle has been 6 weeks ago, which is probably far enough before not to matter to a lot.

Sentiment...

Subscribing

Hope so Davidee,

Since the daily cahrt shows, EUR/USD was bearish until september 10th. After that moment, it's begun a strong bullish trend. I think that it will record a new high in past 4 months.

Right I've only gone long 1 lot on the EUR/USD @ 1.3390.

The Forex does not close as it's 24hr, so I'll specify the near as around 8pm GMT.

When we do not get a high close in the next few weeks I'll shut the position and take the loss, if we get a couple new highs I'll continue to keep the position open and include yet another lot.

That is all for now...

OK that is the weekend after two days to the trade.

The price has closed around 1.3490 therefore the place is now around 100 pips in profit, not much for a trend following system but not bad considering we're just two days into a trade that will last from several weeks to a lot of months.

The day after I entered this trade the price closed together with my trade about 80 pips from the red. I might have entered at a much greater price had I chosen to wait for Thursday's retracement before entering in the management of Wednesday's breakout, however my research shows that waiting for a retracement (on average) causes you to lose more than you win currencies, but works great on indices. On currencies you overlook to a lot of chances by waiting patiently for retracements because sometimes the price never comes back. You will find far more dips on indices and also the abrupt breakouts are a lot less successful.

I was not to bothered my trade finished in the red yesterday, in reality it's to be expected. This is because I believe that 1. It is impossible to select specific tops and bottoms and two. Whilst the market slowly difts from the direction of this long-term underlying trend there is a lot of randomness from the short term. The price going a hundred pips or so against you early on doesn't therefore mean your trade isn't a good one, if you can not select the bottom to enter long at and there is randomness the price going against you sometime throughout your trade must therefore be expected. The only way you could expect to never be 100 pips from the red would be if you thought you could select and precise top or bottom inside 100 pips, and I don't believe people can - at least not always anyway.

When we don't get a new top closing price in the next few weeks I'll deem it to be a lack of follow through (as explained in the mechnical system Strange Currencies on my blog) and I'll be looking to close the trade, but when the price continues to make new highs I'll be looking to add another lot to the place on a close above 1.3700.

Hi,Davidee


I'm With you on this Method and hope we gain some pips and some knowledge along the way. I read all of your methods on your own internet site and all are intriguing. Thank you for sharing and hope to enhance your thread. God Bless MR D.

Forgot to mention that the 50% retracement on the monthly chart from november 2009 is only over the current price and you may observe some rejection of price in the short term. Then again it could just blow. We'll see. God Bless MR D.

Well, that is Monday over. The market doesn't look like it is closing at a new high now, find out what it will tomorrow.

OK it is nearly 8pm UK time again so lets call that Tuesday's close - it's created a new high again to shut at about 1.3570ish so that is the trade 200 pips in profit so far... Reset to the number of days without a new closing high counter back to 0.

Hey David, I have a quick query on the leaves for this particular method. Do you mean you will wait 12 days of no new weekly high prior to departing? If so what about big corrections. Would you wait is there more to it . Sorry but I'm somewhat confused. Thanks MR D.

Originally Posted by ;

Hey David, I've a fast query on the leaves for this method. Do you mean you will wait 12 days of no new weekly high before departing? If so what about big corrections. Would you wait or is there more to it ? Sorry but I am somewhat confused. Thank you MR D.

I'll answer your question before I post the daily update.

You are speaking about the system on my site right? It's 12 days for a new rather than a weekly high. Basically, you input the 80 - 120 breakout and just exit in case you don't receive a new high (or low in case you're short) for 12 consecutive days. So you're basically leaving a lack of follow through.

I am not religiously trading this system with this thread, I am just following the essentials of system's 1 and 2 carefully and making remarks. I don't suggest you religiously follow my system , rather I recommend that you read them, take what sounds good to you, change it as you see fit, test it on your own and make it your own. In my case I might go to 15 days or longer before departing when the market was only staying flat, but when there was a very, very big move against me backed by a shift in market sentiment I'd exit much earlier, possibly after as little as 5 to 8 days.

Anyhow I aim to begin of using a leverage of 1:1. If it closes above 1.3700 I'll add another lot which makes it 2:1, and if it continues I'll add yet another lot and take it into 3:1. I might even leverage as large as 5:1 in a really powerful, long-lasting trend, but no longer than that. I consider break even or even a little loss a bad year. A 30% gain on my account a nice and respectable year, and 100% gain to be awesome (with trend following those years happen now and again).