Is catching the trend early risky? Should stop-loss be more liberal?

R

rajesheck

Dear trend traders

We are trend traders who trade with the trend. And most of us feel catching the trend early is very risky We need to understand that day trading is like a war between scalpers and trend traders.

(Do you think it is worth taking the unprecedented risks of gap-ups and gap-downs in holding the position overnight? I always suggest day trading because it is much much safer when done the right way)

(Scalping, in the arbitrage sense, is a type of trading in which traders try to open and close positions in very short periods of time in markets such as foreign exchange and securities with the aim of making a small profit from the trades.

-Wikipedia)

Do you think scalpers trade with trend?

Mostly not!

Scalping is generally trading against the trend than with the trend.

That's how most scalpers try to make money because their idea is "what goes up has to come down" which is opposite of "trading with the trend".

(We the trend traders always trade with the trend that's why we are trend traders)

Scalping activity is pretty intense when a trend (bullish or bearish) is obvious or well established. In other words more the trend is strong, scalping activity works more strongly against the trend.

Is catching trend early risky?
Actually it's the opposite. Catching the trend late is more risky than catching it early because the budding trend attracts less scalping activity.

How to catch the trend early?
Look for these two events to catch a trend early:
1. Market opening OR Trend reversal
2. Early support/resistance (trend confirmation)

How to pick a stock for trend trading?
Pick stock where scalping activity is less predominant.

Forex trading is one area where scalping is very predominant. So i never suggest it for trend trading.

Usually all popular stocks are indulged with intense scalping activity.

Scalpers are not much attracted to any major Index. Thats where trend traders must focus on.

Should stop-loss be more liberal?
When we are trading in scalping intense stocks and also not catching trend early then it is double trouble. Stop-loss will be hitting frequently leading to consistent loses.

If trend traders chose major Index and catch trend early then succes rates are higher. Combined with it if we liberalise the stop-loss the frequency of stop-loss hits significantly comes down which drastically increases success rate and profits.
 
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What I have presented here is a broad psychology/mindset/methodology for the general strategy "trading with the trend".

Trading is a business which is a blend of art and science. You are an unique individual with unique experience, skills and passion. I would be glad if my broad guidelines helps you to create a unique strategy that suits your needs.

Keep your strategy as simple and as clear as possible.

Usually i won't share any specific scenarios or techniques because it will be mostly misguiding since the forum is a broad spectrum of people.

Regarding stop-loss I would suggest to configure it based on your experience. For example if you frequently experience a scenario where your stop-loss hits and immediately returns back to move in expected direction and gives intended profit then it is time to relax your stop-loss a bit. Infact you need to be proud of your strategy in such scenarios.

All the best for your successful Day Trading!
 
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First recognise the sideways market movement

One challenge in catching the trend early is to differentiate between sideways movement and early trend. To avoid misreading the sideways movement as early trend we need to first recognise the sideways movement.

So the general strategy of trading with the trend has three steps:
1. First recognising the sideways movement
2. Identifying the early trend
3. Entering at the early support/residence

And identifying the early trend has to be when...
1. Market opening
2. Trend reversal

IMPORTANT: Trading with the trend is at its best when we analyse using the plain one minute line chart. Simply AVOID gymmics like indicators and pattens.

This is the first time in the history of stock trading that details are given from "outside the box" thinking.
 
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rajesheck said:
Dear trend traders

We are trend traders who trade with the trend. And most of us feel catching the trend early is very risky We need to understand that day trading is like a war between scalpers and trend traders.

(Do you think it is worth taking the unprecedented risks of gap-ups and gap-downs in holding the position overnight? I always suggest day trading because it is much much safer when done the right way)

(Scalping, in the arbitrage sense, is a type of trading in which traders try to open and close positions in very short periods of time in markets such as foreign exchange and securities with the aim of making a small profit from the trades.

-Wikipedia)

Do you think scalpers trade with trend?

Mostly not!

Scalping is generally trading against the trend than with the trend.

That's how most scalpers try to make money because their idea is "what goes up has to come down" which is opposite of "trading with the trend".

(We the trend traders always trade with the trend that's why we are trend traders)

Scalping activity is pretty intense when a trend (bullish or bearish) is obvious or well established. In other words more the trend is strong, scalping activity works more strongly against the trend.

Is catching trend early risky?
Actually it's the opposite. Catching the trend late is more risky than catching it early because the budding trend attracts less scalping activity.

How to catch the trend early?
Look for these two events to catch a trend early:
1. Market opening OR Trend reversal
2. Early support/resistance (trend confirmation)

How to pick a stock for trend trading?
Pick stock where scalping activity is less predominant.

Forex trading is one area where scalping is very predominant. So i never suggest it for trend trading.

Usually all popular stocks are indulged with intense scalping activity.

Scalpers are not much attracted to any major Index. Thats where trend traders must focus on.

Should stop-loss be more liberal?
When we are trading in scalping intense stocks and also not catching trend early then it is double trouble. Stop-loss will be hitting frequently leading to consistent loses.

If trend traders chose major Index and catch trend early then succes rates are higher. Combined with it if we liberalise the stop-loss the frequency of stop-loss hits significantly comes down which drastically increases success rate and profits.
More...

Being too early is no different from being too late, your optimal outcome is neutral and in most cases negative.
 
alistera said:
Being too early is no different from being too late, your optimal outcome is neutral and in most cases negative.
More...

Can you explain your point of view?

My thoughts...
We can define what is too early. But no one can define what is too late.

Since you equate too early with too late ..Do you believe in "What goes above has to come down" ?

Usually scalpers believe in that.
 
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A world By Itself

The opening stock price is defined by previous day's news and other potential factors.

But what happens after the market opens is entirely under the control of the traders. That's why day trading is a reality of its own. Here the only tangible thing is the chart. In other words he who understands the day chart better can make better profits, regardless of what the world is thinking or doing.

Of course every rule has some exceptions but exceptions won't make the rule.

Intraday chart is a world by itself. Extraday chart is not, because of gap-ups and gap-downs.
 
alistera said:
Being too early is no different from being too late, your optimal outcome is neutral and in most cases negative.
More...
%%
TRUE;
+ i actually consider your negative warning , a positive plus.[Meaning, its true under certain conditions]
But big difference is being late tends to pays much better in a bull market SPY or QQQ benchmark uptrend.
Maybe not in SEPT or if one puts an artificial time like end\ of day every day.
IN some cases, some markets \ early can pay much better:D:D
Like what?? I sold eggs some, not anymore;
but spring time is volume time for hen eggs/ that's why we see so many volume price drops, downtrends in hen eggs prices early in year[spring]....................................................
 
rajesheck said:
...

This is the first time in the history of stock trading that details are given from "outside the box" thinking.
More...

You're doing a lot of talking (typing) both here and in other threads you've created talking about the same subject, but you aren't saying anything. That's a rare gift.

Combine everything you've thought outside-the-box with and identify this trend in Crude Oil.

(The blue line connects the market close on Friday evening to tonight's 5PM ET close.)


clgapupthendown.JPG
 
Overnight said:
You're doing a lot of talking (typing) both here and in other threads you've created talking about the same subject, but you aren't saying anything. That's a rare gift.

Combine everything you've thought outside-the-box with and identify this trend in Crude Oil.

(The blue line connects the market close on Friday evening to tonight's 5PM ET close.)


View attachment 316428
More...

The bottom line of all that i am saying is "The quality of our thinking is the quality of our life."
 
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