Wannabe trend trader looking for guidance

Beginner Questions
1

Hello,

As the title of my post says, I’m a wannabe trend trader/follower, but I’m having a pretty tough time.

I don’t really see many people focusing on trend following in currencies – most trading seems to revolve around intraday activity.
I’d love to be able to do that, but I work a full time job so I don’t have all the time I wish I had to devote to it.

Additionally, I’ve always heard that trend trading is one of the theoretically easier styles to use (assuming you can do it without slitting your wrists while waiting for the trend to continue/form).

I’ve tried using the Turtle’s 20day breakout/55day breakout system, but it doesn’t seem to be doing too well over the past few years. Perhaps it is in need of modernization? After all it was formulated roughly 20+ years ago. I’ve started looking at support/resistance breakouts but I’m getting lost when it comes to determining which recent high/low one should use.

I really feel like I’ve just been treading water for the past year, slowly grinding my practice account down from 10k - I’m at around 9.6k now.

They say that trend followers will often take several small losses and make it all up with the big trend, but I haven’t experienced that yet. Perhaps my stop loss levels are too narrow?

If there’s anyone with trend following experience, I’d love to hear it. Even if you’re not profitable, maybe we can bounce ideas around.

Thank you for any insight/comments you might provide.

2

Hi Rainmonkey,

I have only been looking at Forex for three days. I have a friend who follows Innercircletrader or ICT and he has some pretty awesome stuff in some of the threads here. You might want to check them out. Just yesterday he spoke about the turtle soup pattern. I think it is funny that you mentioned, or ironic, you choose. check this thread out, watch the videos he has, I have only watched a few. I am concentrating on the babypips school for now but couldn’t resist the urge to peek, hehe.

anyway bro, I wish you the best!!!

http://forums.babypips.com/newbie-island/36328-what-every-new-aspiring-forex-trader-still-wants-know.html

http://forums.babypips.com/show-me-money-daytrading/43211-inner-circle-traders-millionaire-traders-guild.html

3

ICTs stuff is solid, but again it focuses on intraday action mostly focused on London or NY openings. Trend following is about catching the fat tails. So yes the small losses and making it up and more with 1 winner. Considering you have kept a majority of your account and have been trading for a year, you have your money management/risk management down. Also trend following has the most amount of literature written about it. I would look into classical TA (trend lines, SR, formations) and possibly commonly used MAs like a 50 or 200 day MA for your entries as a start. There are hundreds of books, articles and info on the net about trend trading so just do a google search. But for a intermediate to long term 1-6+ month trade duration, those are probably what your going to be looking at.

4

dear rainmonkey…

i think the system is not the problem for a short term trader like u…a year trading is nothing. i suggest u should using simple system…rsi,sar…fibo and elliot might helping with timeframe h4 daily and week…most important is stick to your system and make this as your second priorities…there is no border in forex…everyone is same and thats make it perfect world- which mean you re lucky coz have other commitment. me? im also lucky coz im stupid…see ya

5

rainmonkey, learn the basics - it’s simpler and you are more likely to make a profit, try Candlestick Reading For Dummies.

6

Hi rainmonkey. You mention looking at Support & Resistance breakouts, and not having time to trade intraday, and wanting to look at trend-following strategies. That is all similar to elements of my approach, and you can find a profitable approach somewhere between those components, imho. Personally, I do not trade breakouts, but I do like to trade with the trend and I do trade Support and Resistance. When you are in a powerful trend, there will still generally be retracements, it’s just how the market tends to work. These retracements will often be to an area that previously worked as S/R. For examples, if you are in a downtrend, you might get a few touches on a Support level, which then breaks, and the downtrend resumes. Then Price will retrace - and it will often retrace to that Support level, at which point that same level becomes Resistance, and you can take the rejection of that level short - although personally I would wait for some PA confirmation. So rather than chopping between trend trading and Resistance breakouts, I would advocate looking for areas where S&R give you an interesting level within the trend. Then wait for some Price Action confirmation, and you are starting to layer up reasons to be in a trade.

If you’d like an example, here’s a trade I just exited. NZD/JPY, look at your Daily chart. There was a doji bar on 19th March, which turned out to be the start of a big drop. Some traders would have gone short from there (I missed it as I was away :frowning: ) - if you look back to 1st August 2011, 5th may 2010, 22nd October 2009 as examples it was a decent level. There followed a pretty sharp selloff, but then look at 1st June 2012. There is a massive low test, rejecting an area around 58.60. A look back to 15th December 2011, 26th September 2011, 31st August 2010, 25th May 2010 and some earlier touches shows that this is a decent level. It has not always held, but it has a lot of touches going back a long way and the market does remember these levels.

So still kicking myself for missing the mid-March Short, I wasn’t going to miss this one. I went long on 1st June, targeting 63.50. I picked that TP as it is within a level that has caused some reaction a few times in the past - 26th January 2012, 1st November 2011, 16th September 2011 - it gave me room to make some money without looking too greedy (some traders would target all the way back up to 69.00 or so!).

My TP on this trade was hit on 20th June, giving me just better than a 1:3 Risk:Reward, even with my pretty modest ambition on the trade. All I did was look at overall trend, Support and Resistance, and I worked off the Daily chart, so this sort of approach would work around a full time day job.

I’ll try uploading a chart in case it makes things clearer, but my success rate at uploading charts is not great so no promises…

Anyway, hopefully that is not too much of a ramble. What I am trying to do is show that simply overlaying trend, Support & Resistance levels and Price Action onto a Daily chart can give you a moderately simple approach to trading that works in the evening and can give a decent R:R.

Apologies if it has just come off as a confusing ramble!! Hopefully you find something of use in there. Basically, what I am saying is stick with it and don’t overcomplicate. And certainly don’t worry about not having the capacity to trade intraday - this can be done just by looking in in the evenings, and if anything in the current climate that enables one to tune out some of the noise.

ST

7

Sorry, that chart turned out pretty small, this might be better:

8

And apologies for the big red cross in the middle of my images (I warned you that I am not an image natural lol) - there is no significance to it, it is simply my mouse cursor which I helpfully left in the middle of the image. Sorry.

ST

9

ST, that’s nice and colourful, is it your rainbow system :smiley:

Do you interpret that as rangy but more bullish than bearish?

10

This is why I ask, I’ve employed this as a major part of my strategy now, and it’s proving mightily effective, bear it in mind as the chart unfolds, we’ll see what happens.

11

Lol yes that is the other issue with posting charts on here: it puts one’s head above the parapet for chart layout critique!! But it’s fine, I can take it.

I tend to have four EMAs on there, as I find them less subjective than hand-drawn trendlines, so they keep me honest. I have them in garish colours for two reasons, a) I don’t get them muddled up, even when I’m in a hurry, as I keep using the same colours, and b) my eye has finally got trained to tune them out so they don’t distract me. But when I do my initial scan for setups I take the EMAs off the chart, I just dial them back in once I think I have a setup, as they sometimes show me something new that makes me change my mind. I do the same with Fib. So my trade scanning is done from a naked chart, I just look for some comfluence once I think I am on to something. EMAs are pretty useless in a ranging market, anyway, so I could have left them off this one. Too late now!

And in terms of the sentiment of this chart, it is ranging with a slightly unclear overall bias, to my eye, which is another reason why I set my TP in the middle of the range. From where Price is currently, I think we’ll hit both extremes of the range… but in which order is anyone’s guess, which is why I’m not trading it! If I had to bet, I’d say Price will drop further to retest the bottom of the range, but as we have covered in other threads I don’t gamble so I’m not trading the middle of this range, personally. I’ve made my money on this one, move on to the next, now.

ST

12

Interesting stuff, certainly looks plausible, and given that there was a low before ‘my’ low test - around the 59.7 level, 18-24 May, your suggested higher low could sit around that level. I would certainly not be astonished to see that, and if Price put in a higher low at that level or above I’d immediately be thinking bullish thoughts. The Weekly chart is also looking more bull than bear, to my eye.

Will monitor with interest! Although wouldn’t that strip you added to my chart look good in a nice shade of cyan, magenta or perhaps a nice pea green…?!

ST

13

It could test the lows like you say, but those tidy S/R areas are like magnets.

14

Rarely a truer word spoken!