As a trader or investor we wish to ride trends to profits and exit markets when trends change and begin moving against us. We want to act safely and that means acting on facts not wishes or assumptions. Here are three rules that are critical to remember if one wishes to trade trends safely.
- You cannot pick a top or bottom based on trend definition. If you use the trend-following method, forget about trying to pick a top or bottom. The trend-following method is based only on fact not assumptions. A trend is not a trend unless it is on its way. Follow trends as they present themselves. Act on what the market is telling you. You can make nice profits without trying to outsmart the market by trying to predict a top or bottom yourself.
- You cannot assume the trend will continue after a pullback. Let the market tell you what it is doing. Never assume. If you are in a good trend the trade should not lose. However if you see two consecutive losing trades even though you are following the trend definition, it means the market is choppy and you should stop trading that market at that time.
- Based on trend theory, you may know the market is going up or down but you don’t have information about how high or how low the market will go. Let the market guide you for maximum profits. With trend-following methods, the winning rate is only about 50/50. However as trend-followers we make large profits because we use market signals to ride the trend in winning trades, and keep our losses small by exiting losing trades as quickly as possible.
AbleTrend is designed to help you to discover the early trend and follow it with support levels step by step to escort you to reach its maximum potentials with managed risk. Here is an example.
In the upcoming blog we’ll introduce the Golden Region of Entry.
The best way to learn a skill using trading software is by practicing it. Though the webinars and free one on one trading sessions will help you to prepare for actual trading on the live markets, it will not tell you how your psychology will react to the experience. This insight is gained only through experience, so give AbleSys trading indicators a try today. To get extra 10% off for AbleTrend 7.0 30-day trial, here is the code: WTMF10 (order online).
You may also find some new ideas in our blog: http://blog.ablesys.com/
Our webinars are available to view on our youtube page, usually a day or two after the live session: https://www.youtube.com/user/AbleSysCorp
I welcome your feedback. Did you like today’s message? What other topics would you like to see? Please let me know at gracezh@ablesys.com