This is about price action - trend trading . When the market is in an up trend for this example and your in a long position Do you keep trading past the smaller lows on to the next highs or do you try close your trade before them lows and just try to catch the next long ?
Trend followers go into the trade with a defined tolerance for any move against their position. Usually they use some measurement of range such as Average True Range or a raw price range such as the 4 week price range or the ten week price range. In a long trade, as long as the price does not go below that range (which rises as the trend moves upward) they do not exit. They wait until price moves below it.
Check out the following example:
That is Donchian’s system in a single screen shot. A trend follower on that trade would have groomed his stop to lock in over 1400 pips. With the entry risk being less than 300 pips, the trade is returning almost 5 to 1. Donchian DMT.
-Adrian
According to my trading method When ever I’ll see a good setup in line with the trend I will trade it. Holding it for long or closing with good RR is what depend on the trend strength.