It’s time to get started and learn High Probability Trading Strategies: From Entry to Exit for the Futures, Forex, and Stock Markets. We begin with a unique approach to momentum strategies, the multiple time frame momentum strategy i.Just about every trading book or course will emphasize that you always want to “trade with the trend.” It’s great advice. If you are always trading with the trend, you should mount up some very impressive gains.
Two big questions are usually not clearly answered: “How do you objectively identify
trend direction?” and “Is the trend in the early or late stages?”
In almost every trading book and course I’ve seen over the past 20 or more years,
the trading educators show many after-the-fact examples of how their trend indicator
identified the trend direction long after the trend was established. It is easy to show
a trend on any chart long after the trend is established. But how do we identify trend
direction in the early stages? How do we identify when an established trend is in the
later stages and in a position to make a trend reversal? Without some approach to help
identify where within the trend the market likely is, typical trend analysis will usually be too early or too late to be useful over time.
It is easy to fill a book with after-the-fact examples of trends. Trendlines, moving averages, channels, momentum indicators, and many other techniques can show the trend on historic data. Unfortunately, none of these techniques can reliably alert you to the beginning stages of a new trend or whether a trend is in its final stages. They can only identify an established trend, usually long after the trend is established and the optimum entry is long over.
In fact, most methods of identifying a price trend are doomed to failure for practical
trade strategies with as many false reversal signals as confirmed ones. This is a bold
statement, but I believe it is true. It’s time to stop the madness and and deal with the
reality of trend position. I defy any trading educator to provide evidence that his socalled trend indicator consistently provides an accurate signal of trend position and trend reversal in a timely manner that a trader can take advantage of.
How can I make this statement? Let’s defy the crowd and think for ourselves in a
logical manner. What does a trendline, channel lines, moving average, or other indicator represent? Every moving average, channel, or indicator is based on historic price data. It can only represent what has happened or what is the current market position relative to the lookback period. It has little predictive value in and of itself. It will always be a lagging indicator of the trend position, never a leading indicator of what is likely to happen in the future.
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