Characteristics of a good trend (daily timeframe) to enter into?

Beginner Questions
#1

hi

i’ve been looking at loads of charts (talking about daily timeframe here) and i’m unclear on what a good trend worth getting into should look like (not concerned about the method e.g. fib,trendline bounce etc). i’m thinking maybe a good trend doesn’t have nearby overhead resistance (overhead resistance must be say at least 3R distance away ie 3 times the risk) , since overhead resistance levels seem to be often held . Just feels like regardless of whether the higher timeframe (weekly) is in harmony or not, anytime I see the start of a new e.g. uptrend (2 higher highs and lows), or one with more waves, that trend might keep going for long or end quickly if I enter. What should I be looking for? Any examples from aud/usd or eur/usd , daily timeframe in last 2 years people want to show, of good and bad selections. Or whatever advice you can give me for what to look out for…

thank you all
Harp.

#2

Try using multiple time frames to confirm your trend, the 3 ducks system is a good place to start

#3

This (banned!) forum member’s thread may be of some use to you:

http://forums.babypips.com/newbie-island/32400-finest-trend-trading.html

There is a lot of info out there, but the question is:

are you wanting to trend-trade long-term or short term?

There are different approaches, depending on your answer: you may, for example,

want to identify the trend and trade rallies within its direction, or you may like

to identify buying AND selling opportunities within a trend channel, or, even, you

may buy(or sell) and hold for long periods while a trend unfolds…

In the latter case, you may be in for the long ride, because forex has much less volatility

than stocks (historically), therefore big trends can take time or be more short-lived (just

look at USD/CAD, or AUD/NZD, for example)… Sometimes, like GBP/USD or EUR/USD, you

may be stuck in a trend-less environment for an entire year, so the ‘hunt’ for trends is not

always possible within ‘the Majors’ and you may need to look outwith that environment…

Indeed, you may even need to look out of forex altogether… 2014, for example was an

extremely quiet year for some of the Majors, e.g. USD/JPY… it was a moribund pair with

tiny daily ranges… 2015 was not much different for USD/JPY, but look at it now, it is making

a nice downtrend, breaking through levels as it goes…

As Eddie says, it is always good to look at different timeframes, but, again, you need to get

to a point where you know which timeframe you would be trading: if trading for weeks and months,

for example, you would not want to use a five-minute chart… However, the reverse is not true,

because even short-term traders (e.g. scalpers) want to know the wider direction of the trend…

However, the same chart can provide seemingly contradicting information depending on the time

frame that you use, so that you may get counter-trends within a larger trend, which means that

(generally) the larger time-frame trends will not define your trading per se, because you could, for

example, sell short down-rallies on a shorter time-frame against a generally bullish trend in the longer

time-frame…

I hope I am making sense :slight_smile:

The long-term trend-trading approach also implies low position sizing and large drawdowns,

potentially, so it may not suit the beginner…

I am guessing that you are still looking for a trading idea/style and risk profile that you are

comfortable with, but if you have any answers to my points above, please tell us more!

Bye for now

and

Happy Trading!

#4

Banned aftet 4600 posts! He must have upset someone big time

#5

I know… You do wonder…

#6

I use a 20EMA, patterns, horizontal zones and all timeframes. Try applying a 20EMA and search out a few D1 charts to see how price reacts w/ that indicator.

#7

As eddieb said, confirm a trend by viewing larger time frames.

#8

great answers everyone. Thanks again. Thought a lot about it all… Looks like I can get multiple time-frames in harmony fairly easy if I just trade 4h time-frame setups that are within daily trends (ie trade the rallies in daily trends) , rather than daily trends with higher time-frame (weekly) in same direction. Didn’t seem to find too many daily trend setups with a higher time-frame (weekly) in same direction, especially in the case of reversals on the daily time-frame. So I might do some manual back-testing on the 4h time-frame for setups there. Might also look at some 1h trends too (little money here, so might just be what I need).

So we want to trade e.g. a rally in a higher time-frame trend. Indeed 60 ema ducks system helps with all that. When I apply a moving average I don’t want price to be just under/over it, but also the moving average to be sloping down/up too (not horizontally),as then it’s really trending. And when I look for a higher time-frame to be in the same direction, I also need price action to be up/down for long enough so that I can at least see 3 moves have taken place e.g. for a 4h trend setup, on the higher time-frame (daily), price action must have gone long enough so I can see at least 3 4h moves have taken place (e.g. down , up down). Until then the higher time-frame isn’t aligned yet (it seems to me). Then again it can get complicated if the 4htrend keeps going for a long time with no counter movement. At some point (not sure when) , the higher time-frame is aligned…complicated stuff indeed.

I might try manually back-testing 4h setups first.

#9

A trend is defined by connecting any three pivots. Once broken, you no longer have a trend. Any timeframe.

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#10

Daily time frame is reliable because it’s backed by a whole day’s worth of data.

This means that the price movement is caused by day-long exchange of capital between entities. When that day ends, it means that after a whole day, the market decided that the candle should appear as what it is.

It’s easier to see decent trends in Daily than in higher time frames. High-quality signals appear more frequently in daily charts too.

But signals on daily charts are more legit compared to lower time frames. H4 can works too but most of the time, high-quality H4 signals are backed by a corresponding daily signal.

Here’s a good daily trend worth trading.

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Here, the “buy the dip, sell the rally” rule is applicable. Bullish trends would be good for buy trades off bullish rejection/reversal signals.

Basically, this is price action strategy. I can’t explain it coz we might go too long.

Hope this helps.

#11

So, where are your trades?

#12

Check those videos