My views on trend following.

It’s more important than ever to get clarity on market trends. Without a clear methodology to identify a trend and also corrections in the trend, trend trading would be impossible.

To simply say “I’m a trend trader” is not enough. Far too may traders expect higher lows (support) or lower highs (resistance) without confirming that the market is indeed in an environment where that is possible.

Far too many traders also top and bottom pick within a trend and don’t fully appreciate what it is to step in front of a freight train. There is indeed a time to fade or even look for trend reversal but far too many traders don’t analyze the trend FIRST before taking the more aggro tact of fading.

With that in mind I recorded the following video walking you through what I see occurring in the markets right now using the 34EMA Wave and GRaB candles. These are the two most important tools of my visual analysis. Relying on clear, color-coded tools allows me to make decisions quickly.

Consider also the effect on time frames. Choosing which time frame to set a trade up on can often be the most difficult aspect of the trading process. By understanding the trend (or lack or trend) time frame selection becomes clearer.When following the overall (daily) trend, any intraday time frame can be considered. However when trading against the overall trend, I will do so only on short-term time frames like the five, 15, and 30-minute chart. What about when there is NO bullish or bearish Directional Bias on the daily? (Think the EUR/USD) I will also again trade only short-term intraday time frames since there is no overall market trend and I will not expect longer-term organization of sentiment and momentum.

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  • Raghee Horner

    By the way, here’s a link from my personal trading blog about “The first pattern i ever learned” – and it’s a trend reversal pattern. I thought it would be a great footnote to this update.

  • Alpha12th

    The video is too slow in Singapore. Is it possible to get the video downloaded from your blog for viewing. Thanks.

    • Raghee Horner

      Alpha 12th, If you send your email address to ragheehornerblog (at) gmail (dot) com I will have it FTP’d to you.

  • Busi Buthelezi

    Great Video. Thanks Raghee!