trend following
- Thread starter caotrader
- Start date
This is easy and simple using moving averages:
1) Pick an anchor chart (your long-term trend defining chart).
So, for example, if you're scalping on a 1 min chart (good luck), then maybe a 15 mins or 30 min is your longer time frame.
2) On your anchor chart stick on some Exponential MA's. E.g. 10,20, 50 and 200 - but definately the 50 and 200.
When they are in order (e.g. uptrend) i.e. 10 above 20, which is above 50 which is above 200 - then you only take long trades.
If in downtrend and proper order, only look for sell signals.
If they are chopping about and flatish, then you are in a range trading period.
So, where do you take you buy or sell signal from? Your scalping, shorter timeframe chart. Put Exponential MA's on that one, but play around with them to see what fits best. Maybe same, 10,20,50 and 200 (but always the 50 and 200) and then look for pullbacks to the MAs on your short time chart as your support/resis levels for your trades.
Or whatever your trade signal maybe - but in direction of trend on anchor chart.
Good luck
1) Pick an anchor chart (your long-term trend defining chart).
So, for example, if you're scalping on a 1 min chart (good luck), then maybe a 15 mins or 30 min is your longer time frame.
2) On your anchor chart stick on some Exponential MA's. E.g. 10,20, 50 and 200 - but definately the 50 and 200.
When they are in order (e.g. uptrend) i.e. 10 above 20, which is above 50 which is above 200 - then you only take long trades.
If in downtrend and proper order, only look for sell signals.
If they are chopping about and flatish, then you are in a range trading period.
So, where do you take you buy or sell signal from? Your scalping, shorter timeframe chart. Put Exponential MA's on that one, but play around with them to see what fits best. Maybe same, 10,20,50 and 200 (but always the 50 and 200) and then look for pullbacks to the MAs on your short time chart as your support/resis levels for your trades.
Or whatever your trade signal maybe - but in direction of trend on anchor chart.
Good luck
Read 'way of the turtle' by C. Faith. imo a pretty good book about trendfollowing
he discusses the turtle trading method and the donchian channel method, which are longerterm trendfollowing systems but nevertheless very interesting
a good piece on resistance and support too imo.
================
Good;
Wood74
However keep in mind experienced scalpers [Don Bright/Bright trading]do not like the longer time frames of 1 minute candle charts.
Moving averages are more useful on stocks than futures;
my opinion. Thats another reason i like stocks & ma's + discretion,+ ma's + time.
Another way to say the good;
that wood74,
said.
Alan Farley [Swing Trader book-writer, get that book asap]said bears live below 200 day moving average,
on [ for example 200 or 222 , or 274 day day chart;
===============================
bulls live above 200 dma.....................................
======================
Goodpiece;
& he uses longer than 200 day moving average.
Less comissions that way;
actually its excellant and easier book to understand [mostly] than Alan Farly's book.........................................................
What I've been noticing is that when a stock is uptrending on the day, it will continue to trend upward as long as it remains above the 20-period SMA on each pullback. (If you're trading very short time frames, an 8-period SMA is helpful as well.) So you could buy on any pullback and set a stop at the 20-period SMA. Once the stock becomes overbought and the buying volume begins to dry up it will dip below the 8-period SMA first, then the 20-period SMA and generally that signals a reversal.
The opposite applies to a downtrending stock. As long as it keeps bumping its head against the 20-period SMA on each attempt at a reversal upward, it will continue to down trend. Once it breaks through, it stands a good chance of continuing upward for a while.
I've heard in several trading webinars that when you're in a trade and want to know when it's time to take profits, use this as a guide; stay in the trade as long as it keeps bouncing off of (longs), or bumping into (shorts), the 20-period SMA (8-period if you're taking profits on smaller moves).
trend will end at a price spike, and like to continue before that.
Quote from murray t turtle:
======================
Goodpiece;
& he uses longer than 200 day moving average.
Less comissions that way;
actually its excellant and easier book to understand [mostly] than Alan Farly's book.........................................................
Alan Farly's book .....
really a boring book
And his seminar too
