The finest in trend trading

Beginner Questions
1

[B]INTRODUCTORY POSTS.[/B]

Hello there : :slight_smile:

[B]Well this thread on trend trading is now here as promised.[/B] Indeed it has had a long gestation period. I have prepared many charts beforehand from last year especially for this thread.

[B]I take this opportunity to thank all those posters who have welcomed me and defended this new thread. I suspect there is power in this thread – it it being attacked before it even starts!!
I am an old man and have everything I need in life.
If this thread helps someone become a better trader then I will be satisfied and have achieved my aim. [/B]

This thread is an answer to some of the criticisms of my candlestick trading PDF.
For that you had to wait until a candlestick pattern actually appeared and that meant continuous monitoring of the computer screen.
Further the method is a knife edge method. If you did not get the analysis correct beforehand, you could potentially make substantial losses.
This thread hope to address those matters…………

All can post here and all ideas are welcome. However, it will be a strictly practical thread. Philosophical posts will only contribute to a waste of time and are not exactly welcome – those who know me and know my style will already understand this.

This thread is written with new traders in mind. :slight_smile: :slight_smile:
I will try to keep matters simple.
That is not to say that experienced traders will not benefit from the material herein.
[U]Experienced traders can bring great ideas to bear[/U] so that appropriate modifications can be made to the ideas already presented. :slight_smile:

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Apart from the first few introductory posts, [U]this thread will be entirely [/U][U]pictorial,[/U] that is, all explanations are by way of [U]using charts and diagrams.[/U]

As a retired school teacher, I know that this is the best way to learn.

Please note that this is a guided thread.
The answers are mostly already worked out beforehand by me.

But modifications are still possible – there are great brains on this forum!!
All relevant discussion and useful ideas/modifications are welcome.
However, understand that if there is an argument between two posters and the matter gets right off the track, then I will have to pull the thread back into line.
After all, there is a potential syllabus.
There has to be.
Otherwise, with a thread like this, we could even end up talking about such things as telekinesis!!

[B]The only people not welcome on this thread are trolls, scammers selling something and dreamboat philosophers.[/B] :mad: :mad: :frowning:

I ask that all posts be [U]practical and relevant.[/U] :slight_smile:
This thread will produce a [U]definite method of trend trading[/U] at the end of it.

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I ask that, posters consider supporting their ideas with charts themselves.
It helps greatly with clarity. :slight_smile: :slight_smile:

I ask that you post full sized charts and not thumbnails. :slight_smile:
Thumbnails are difficult and unattractive to work with when you wish to make a point.

For all new persons to this forum, here is a hyperlink that explains clearly how to post charts on this forum.

http://forums.babypips.com/newbie-island/30564-how-post-charts-forum-upgraded.html

To all people new to this forum, I strongly recommend using “[B]Photobucket[/B]” as your image server because it is a really good one without operating problems.

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[B]REFERENCES AND ACKNOWLEDGEMENTS[/B] :slight_smile: :slight_smile: :slight_smile: :slight_smile:

In compiling the material for this thread and devising the trend trading method outlined herein, I have made use of the ideas taught in the following books (although not everything, of course, is from those books)……….

[B]Trend Trading by Daryl Guppy,[/B] Wrightbooks 2004, John Wiley and Sons Australia.

[B]Chart Trading by Daryl Guppy[/B], Wrightbooks 1999, John Wiley and Sons Australia.
[B]
The NEXT STEP to Share Trading Success by Leon Wilson[/B], Wrightbooks 2005, John Wiley and Sons Australia.

[B]Dynamic Technical Analysis by Philippe Cahen,[/B] 2001, John Wiley and Sons.

[B]Bollinger on Bollinger Bands by John Bollinger,[/B] 2002 McGraw-Hill.

[B]TECHNICAL ANALYSIS Power Tools for Active Investors by Gerald Appel[/B], 2005 Financial Times Prentice Hall.

[B]Getting Started in CURRENCY TRADING by Michael D Archer and Jim L [/B][B]Bickford,[/B] 2005 John Wiley and Sons.

[B]FX Trading by Alex Douglas, Peter Pontikis, Larry Lovrencic,[/B] Wrightbooks 2006, John Wiley and Sons Australia.

[B]The Secret of Candlestick Charting by Louise Bedford,[/B] Wrightbooks 2000, John Wiley and Sons Australia.

[B]Active Investing by Alan Hull[/B], Wrightbooks 2001, John Wiley and Sons Australia.

[B]Technical Analysis from A to Z by Steven B Achelis[/B], 2001 McGraw-Hill.

In addition I have done much searching on the internet and much personal testing of everything that has been found useful.

I wish, therefore, to point out that this thread is a properly researched work and not a junk thread.

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All my charting is taken from my demo program of GFT, which is my broker.
My live program chart remains secret and unaffected for safety.

I will be listing quite a bit of computer programming language which is used in the GFT program.
This programming was done by me last year.
I will immediately thereafter ask that someone, if possible, translate the programming into MT4 language.

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Throughout this thread I will be using different coloured candles, such as green/red…….yellow/blue……yellow/dark grey……light grey/red……and so forth.
This is done to allow for flexible thinking.

The mind tends to get into a rut and suffer from reduced competency if we only use one set of colours.

Individual colors allow posters to customise their input by having a particular colour combination that is a characteristic of their posts.
In each case I will use the [U]darker colour[/U] to indicate a [U]down candle[/U] and a lighter colour for the up candle. (recommended).

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The thread has been divided into [U]topics.[/U]
Each topic is a section of subject matter.
When that matter is brought to conclusion, a new topic will start.

The begin of this thread will (hopefully) be very interesting and attract many posters.
However, [U]quite deliberately[/U], I have made the middle of this thread [B][U]rather boring and unattractive.[/U][/B] :eek: :eek: :stuck_out_tongue:

[B]Why?[/B]

Because this is a powerful method explained herein and I want only those who are truly dedicated to it to continue on in this thread. The final research done here will [U]consist of the work of every contributing poster. [/U]

All the dreamers, philosophers, greedy people after quick riches, impractical and vague people need to be removed before the end of the thread.
This thread is not for them, they will not understand it, nor find it useful…………

Towards the end of the thread comes the climax. The material will be simplified and [U]great surprises[/U] will occur. But this is only for the dedicated and those determined to succeed.

How long will this thread last?
With the material I have prepared alone, we could be looking at least at some 75/100 pages (allowing for charts). Now with everyone else on the bandwagon, well……………??

There is, however, a definite trend trading method at the end, and a PDF showing how to use the trend trading method is in the making!! :slight_smile:
It will be my 2nd PDF.

LET THE TREND TRADING BEGIN

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TOPIC 1
INTRODUCTION

Have a look at the following chart >>>

1024Ă—640

Where is the trend?

Hmmmmmmm.

Bit hard to say really.
Ask your 5 year old child!!
They are sure to see it if you can not!!

Now I am going to contend that asking your 5 year old child is not a fair answer.
If that was so, why is your 5 year old child not doing the trading instead of you!!?

The idea here, being, that a trend is going up if the price action is higher at the right of the screen and going down if the price action is lower at that point.

But is that really a trend?
Lets have a closer look………

NEXT POST.

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Have a look at the following chart.
Lets see if we can find some trends. >>>

1024Ă—640

We see that there appear to be long trends and short trends.
What happens in different time frames?
Is there more we should learn first???

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Lets start by looking at our previous chart first.
Lets look closely at a section of it
Using the instant magnification selection tool of GFT I selected the right hand section of the previous chart >>>

1024Ă—640

The original trend is shown in the original blue (double blue line).
But looking more closely, we see a whole new picture – a host of little trends.

The down ones are shown in pink, the up ones in green.
What are we to make of this?
Can we trade the main trend in blue?
Or must we first see and trade the pink and green trends?
How do we know how many pink/green trends make up the blue trend?
What about different time frames?

Are we just looking in hindsight and not realising that this may not be possible in real live trading?

We need to get clear answers to these and more questions.

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[B]TOPIC 2
DEFINITIONS[/B]

Before we even start, there are some mysteries we need to clear up.
Thinking of the previous chart, we see both small and long trends.
But how do we trade them?

We can only trade them when we see them.
But how do we know when we see them?
How do we know what we are looking at?
How do we know that we are looking at a trend?
What is a trend?

[B]What is a trend?[/B] :confused: :confused:

[B]Aha!![/B] :smiley:

[B]There we have it.[/B] :wink:

Without realising it, we all like to trade trends, but what is it we are really trading?
We have some intuitive idea of what a trend is, but can we really define it?

After all, if we cannot define a trend, then we are trading something which we have only a vague idea of!!

That is dangerous!!

If we do not have a very clear idea of what a trend is, then how can we trade one satisfactorily?
You [U]do want [/U]to make a profit on this trend don’t you!!?
And how do you do that if you don’t know what a trend is?

If you have a vague idea of a trend, how do you know when one starts and finishes?

[B]And if you do not know when one starts or finishes, how can you trade a trend profitably??[/B]

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Therefore……………
we need a [B]DEFINITION[/B] of a trend.

This [B]DEFINITION [/B]needs to be very precise, like computer language.

A computer does not know what it is doing.
A computer knows nothing and you have to give every instruction in detail.
A definition is needed that is idiot proof.

[B]We cannot have vague definitions or else we will have a nebulous formula with which to trade (or none at all)!![/B]

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[B]Lets look at a vague definition example…….[/B] :smiley:

What is a table? :stuck_out_tongue:

A table is a flat surface with 4 legs that supports objects put on top of it.

Well then………

What about a surface with only 3 legs?
Or your round dining table with only one large leg in the middle?

OK, a table is a flat surface with one or more legs.

Hmmmmmm.

My television has a flat top and stands on a cabinet with legs.
Is the television a table? :stuck_out_tongue:

What about when you go for a drive in your 4 wheel drive car into the forest and then use the bonnet of the car to make a cup of tea?
Is the bonnet a table? – it has no legs? :stuck_out_tongue:

My bicycle seat is flat and stands on one leg (post).
Is it a table?

We could go on and on…………

[B]The message here is that we need a precise (operational as well as conceptual) definition of a trend……….[/B]

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[B]>>>> …………And so to that end we now work.[/B]

[B]A trend is………………[/B]

Definitions invited. :slight_smile:
Go ahead and submit your definition. :slight_smile:

But expect me to attempt to put holes in it for the purposes of perfecting your definition!! (using pictures and charts!!) :stuck_out_tongue: :stuck_out_tongue:

[B]We will persevere until we perfect the definition!![/B]

(I have already developed it but spoon feeding will not cause any of us to grow!!)

[B]Now over to you!!..[/B]

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First of all, Tymen, thank you very much for all your efforts and dedication. I’m sure a lot of novice traders like me appreciate it.

Going back to the “trend definition” issue… My first attempt would be something like “A clear indication that, given a particular timeframe, the price at the end of the studied period - X candles - is lower than (or higher than) it was at the beggining of the period”

I’m sorry if the definition sounds silly, but I tried to keep in mind the computer language example, and I’m also handicapped by the fact that English is not my native language

16

Thank you for the compliment Septem. :slight_smile:
I am here to help.

I’m sorry if the definition sounds silly,

There is nothing silly about your definition - thank you for your bravery in a first attempt!! :slight_smile:

given a particular timeframe,

This statement of yours will be vital to our final definition - different timeframes have different trends (this is obvious by inspection). :slight_smile:

"A clear indication that,

Now what is a “clear indication?”

Your definition does not give us the beginning or end of a trend!!
Further look below >>>

1024Ă—640

The point B is higher than A.
The screen shot is the “studied period”.

Would you consider A - B to be a trend??

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1024Ă—491

There are lots of definitions, none right or wrong. I like the use of Dow Theory with higher highs and higher lows in an uptrend and the opposite in a downtrend. EU has been in a downtrend since it broke the pink line on the hourly

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Tony beat me to it :slight_smile:

I was going to offer higher highs and higher lows for an uptrend and vice versa for a downtrend.

However I’m sure Tymen will point out this does not define the start of a trend or an end per se…

21

I think Tony has covered it pretty well because that is what I would have said. Higher highs and higher lowes = up trend while lower lows and lower highs = down trend.

This definition does not address time frame because an up trend on a daily chart could still be a down trend on a 4h or a smaller timeframe like 15m.

e/u downtrend on the 4hour chart

e/u 15 minute

This maybe not the best example but the 4hour chart is clearly down while the 15minute chart is sideways. Because the 4h is sloping down at a 45 degree angle I would say this is a very strong down trend and I would have to see a higher high print in order to consider going long.

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Great thread Tymen. Very nice work so far. I look forward to more :smiley: