in my humble opinion, trying to follow a trend is saying that because price has been rising until now, there is a probability to rise even further.
now, in some markets that is happening often, with trends that last longer, are more fluent, but there are markets, like the fx where price can't possibly trend that well on a short timeframe because there are many participants and fundamental conditions are not really prompting a strong rise or decline for a prolonged amount of time. basically, the market is not constructed like that.
so you can't really follow trends and make a profit consistently because the sad truth is that intraday, trends are present about 20% - 30% of the time in populated markets.
this mechanical approach got me thinking about the previous post.
sice we have a brain, why do we shy away from using it and rely on mechanical rules.
i'm not saying to reinvent the wheel or come up with crazy and complicated strategies.
but, one simple strategy might be this. price is at a previous swing high level and does an evening star pattern, therefore creating a double top or a slight M pattern. trade a downtrend from there until price reaches the last support level.
i mean, i am not against trading a trend but i am against mechanical trend rules based on indicators. the reason is that indicators and mechanical rules don't account psychology and many times, depending on the lag, you are very very late and you are right about 20% of the time....
rational anticipation is a luxury computers don't have.
now, in some markets that is happening often, with trends that last longer, are more fluent, but there are markets, like the fx where price can't possibly trend that well on a short timeframe because there are many participants and fundamental conditions are not really prompting a strong rise or decline for a prolonged amount of time. basically, the market is not constructed like that.
so you can't really follow trends and make a profit consistently because the sad truth is that intraday, trends are present about 20% - 30% of the time in populated markets.
this mechanical approach got me thinking about the previous post.
sice we have a brain, why do we shy away from using it and rely on mechanical rules.
i'm not saying to reinvent the wheel or come up with crazy and complicated strategies.
but, one simple strategy might be this. price is at a previous swing high level and does an evening star pattern, therefore creating a double top or a slight M pattern. trade a downtrend from there until price reaches the last support level.
i mean, i am not against trading a trend but i am against mechanical trend rules based on indicators. the reason is that indicators and mechanical rules don't account psychology and many times, depending on the lag, you are very very late and you are right about 20% of the time....
rational anticipation is a luxury computers don't have.
