I'm a day trader so my comments pertain to intraday trading using mainly a 5-min chart.
Once a trend is in progress, price normally makes a minimum of 3 pushes up or down before even attempting a reversal. In a strong trend you'll get 4 or more pushes.
So if price has double-bottomed or double-topped (or an approximate DT/DB), and one push off that zone has transpired, you join the trend when price pivots off the pullback. You can continue to add to a position or join the trend again as long as a higher high (in an uptrend) or lower low (in a downtrend) was put in.
Most of the time price pulls back to the rising or falling 20-bar moving average (20 MA) before pivoting and resuming the previous move. If the trend is very strong, it may never pull back that far, so many trend-followers average down into their positions when a partial pullback has occurred (and of course stop out if the trend line/MA line breaks down), and if the trend resumes without a full pullback they'll then add on to the winner. Shallow pullbacks in a strong trend trap counter-trend traders and add to the fuel for the next push up, when those stops get triggered. These first mouse get trapped and that's why the second mouse gets the cheese, the mouse who waits patiently for the double top/bottom ( or LH/HL) before taking a contrarian position.
Now once a DT/DB or something close to it is put in, you take a contrarian position to the trend because the bulls or bears who were in control are not so excited about these prices any more and the opposite camp starts moving in, licking its lips.
You can be aggressive and take a position right away, or you can wait for confirmation (the first lower high/higher low). I personally am aggressive with those DT/DBs, because the stops can be placed very tight.
Yesterday I traded CL (oil) and my first trade was a with-trend trade to the long side off the 3rd higher low from the overnight pivot low. I caught a nice piece of a measured move up. It wasn't too late after all.
Then once a lower high was put in off the new high, I shorted and got stopped out on a little spike. This is common when you try to catch the reversal of an existing trend so you can get into the new trend early. Don't let those head fakes get you down; prepare to get right back in unless the previous trend really resumes by way of yet another higher high or lower low.
I did just that, getting right back in at about the same entry price as my first attempt, after the spike that stopped me out left a still lower high, and then I caught a strong push down; got back in on the rally to the falling 20 MA, caught the next push down; back in on the rally to the still-falling 20 MA, and caught a 3rd push down.
So that's how you get in on an existing trend, and also how you watch the reversal into the start of a new trend.
This is low-risk, high reward trading.
I move in and out of positions with each push, but many trend-followers stay in their position as long as the 20 MA isn't breached and in fact continue to add to it on each retracement to the trend line.
