Indrajit08

How to Execute the Trend trading system?

Education
NSE:WIPRO   WIPRO LTD
Look for Low risk, High reward, and High Probability setups. – Richard Weissman

Scenario
Many traders get destroyed by fighting the trend, insisting that the market is due to reverse itself or they try to chase the market. They may try to catch short-term countermoves in hopes of making a few quick points, or they may always look to catch tops and bottoms in hopes of capturing the big moves. All these traders end up trading against the longer-term trend and against the odds.

How to find low risk, high reward, and high probability setups?

Use of Trend Following indicators for High Probability trading

A-Use of Moving average.
If you just jump into trades because the market is trending, you will be guilty of chasing the market.
You have to remember that the market will never go in one direction nonstop, the market typically congests or retraces after a strong move.
When the market is trending and you are looking for a place to get in, wait for it to retrace to one of the moving averages or trendlines . When the price is just riding on the moving average or trendline, your downside risk is smallest because you know you will be out as soon as it breaks the line.

B-Use of ADX (only for conformation)
The ADX does not tell you the direction of the trend; it only tells you if there is a trend and measures how strong it is. On its own, the ADX lags price action and is not a great indicator, and so one should not use it to trigger trades. Instead, it should be used as a way to get confirmation of whether the market is trending or choppy and how strong it is.
The level between 20 and 30 is considered neutral. The higher the level, the stronger the trend. When it is rising, one should trade only in the direction of the trend. When the ADX is below 20, you can consider the market to be choppy and range-bound, and a trending system will not work well, resulting in whipsaws.

Things to Remember while Trading with the Trend

1. Know what the trend is.
2. The best trades are made in the direction of the trend.
3. Assume that the main trendline or moving average will hold.
4. The longer the moving average is, the better it defines the trend.
5. Wait for the pullback.
6. Don’t chase the market.
7. Don’t fight the market.
8. Even in the strongest trends there should be some retracement.
9. The closer the market is to the trendline, the better the risk/reward ratio is.
10. Use ADX to determine the strength of the trend.
11. Higher the level of ADX , the stronger the trend, below 20 consider the market to be choppy
12. Hold trades longer in a strong trend.
13. Wait for confirmation of a trendline breaking before reversing position.
14. Know where the Support levels are.
15. Place stops outside the Support levels.

Closing Words- A successful trader will trade primarily in the direction of the major trend, waiting for retracements to get in.

Comments

Thanks for sharing your knowledge with others.
200 coins
+5 Reply
moving average konsa dalna hai meas 100, 200,50 ??
+15 Reply
@vishwajeet24 I have used 50 MA
There is no fixed rule, experiment with different length moving average until you find the ones that fits  best to you and your setups.
It has been respecting its 50 period MA since a long time and recently also it has bounced off it.
+5 Reply
I also found it most rewardable strategy. But we are jumping from one to another. one important point is every stock respects different moving average. so manually backtest is good for getting confidence.
+2 Reply
bro...what will b the timeframe?
+3 Reply
moving average varies according to how you trade
For example If you want to do intraday then 50 EMA is good Time Frame should be between 5 to 15 minutes
If you want to do Swing trading then 100 or 200 EMA is best Time Frame should be of atleast 1 hour .
+2 Reply
he used daily time frame with 50 sma
+1 Reply
kusharora007 vishwajeet24
@vishwajeet24, 200 day is best
+1 Reply
neeraj_mann18oct vishwajeet24
Every stock has is different hence there no fixed rule as such however, you have keep experimenting. Hence, the best thing would be to learn pure price action there are lot of FREE good videos are available on YOUTUBE. go watch it.

You can use indicators in best way if u master price action. Again its my view.
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