Hey Spotrate. Glad to see you are currently doing well. So far as trend trading goes, I am only able to see what the trend was previously. My method assumes that the future is unknowable so I use simple methods to determine if a trend may exist currently in a pair. I'll attempt to exchange it, if it looks like it will. If I am correct, I'll attempt to remain in it add without giving back much of the profits. If I am wrong, I'll attempt to reduce my losses very short, typically about 1/3rd of my typical win. A trend can be found by me most days in the 28 pairs I follow. Of course, what looks like a trend on one timeframe may look like a reversion to imply on another, and the two perspectives can be considered correct. For instance, here is a 4 hr live chart of exactly what I identified as a powerful trend up on the EUR/GBP:Originally Posted by ;
If we look at the same pair on the Daily chart, we see a very clear reversion to imply:
Someone like me trading that the trend would likely remain in this transaction or even add to it since the 4 hour chart shows it still moving upward. Someone trading reversion or counter trend to imply may consider this a good time to consider profit since price has made it back to imply. Both would enter the transaction, but their exits may be different, and of course, exits are where cash is lost or made. The market will determine who was right and who was wrong. Next time it may turn out the way that is opposite.
Of course, price must always revert to imply eventually, otherwise it goes off to infinity or drop to zero, and both of those are very unlikely. The question is when will price revert to imply, and how much past the mean will it operate until it turns? Regrettably I do not have the foresight. That is why I'll stick to this trend until it stinks and depart with the majority of my profit when that happens. If I give back state 30 percent of my profit before I depart on a profound retracement and you simply take all your profits , then you may have the greater win on this round, but I am only able to exchange what I see and I am only able to look in the past to make my conclusions. Trading with these trends is only the best I know how to perform. Trying to exchange the two trend and counter trend would be very confusing to me, but in case you have mastered that art, I congratulate you. Happy trading! - G