Technical Analysis Explained How to Trade in a Trend A good trend is loved by traders . One is wanted by everyone , for their very own , and this is understandable, since a great deal of money can be harvested in a good trend . How should you trade a trend? Well, there are a number of tactics that one can use . Some of the older traders believe trends happen to be easy since any old trading plan will work . Because prices are always moving in one direction , even if you enter with a poor trade position , it doesn't matter , because in the end the trend will give you a bail out . Some truth is there within this maxim, but nevertheless there are a lot of refinements that we can bring to trend trading . One thing learned by market analysts is that technical analysis explained how trends can early on be recognized, and the trend definition by Drummond Geometry, based on the relationship between the close and the Pldot , allows this to be done . You will recall perhaps that when three closes to one Pldot side is the definition of a trend . When the third close occurs, you have a trend. This happens to be significant because a trend's most lucrative and best part is often the earliest part , when it gets its start . After you recognize a trend the thing is to hang with it as long as it exists . If your trading situation permits , pyramiding should be added to the position , so your profit grows faster as the trend continues to develop . Definitely getting on a trend and sticking with it is one of most lucrative parts of trading. If nothing else has been learned , you should have knowedge that your style of technical analysis explained trend formation is one of the basic building blocks of any trading system . Sounds good , but how is entry to a trend timed ? And in a trending market how do you manage a trade ? Not every trend is alike, some are fast, some slow and some are young while others are old . A fresh new trend is what we'll look at first. There has been congestion in the market for awhile, if you're a swing trader perhaps for days, or for many hours if you are a day trader . The parameters of the congestion are clear to you . Then the condition change suddenly, often driven by the news . The market starts to move rapidly on one direction . This is when you act fast. Enter in the direction of the trend as soon as you can and hang on . The entry point is less important than you getting in it . This is a move that will last for many hours or days and the sooner you are aboard the better ! You can get into the trend when the parameters of congestion are brokenor as the next bar retraces to the top of the trading bands . If the trend is real and has new energy to it, for some time you probably won't see deep retracements ! Contrast this to a mature trend that has been going on for a while . Can you still get in ? Yes, but if the energy of the trend is mature and losing punch, then you will need to be more cautious in your entry techniques . In this situation you need to look for a trend pause , a retracement of price to the midline at the very least . Look at the higher time period to ensure you have enough potential left, enough that it is worth getting involved in a trend that is not fresh anymore.
If the guidelines are something you are unsure about taking some time with a chart will provide you with more understanding. Most traders will benefit from taking a closer look at technical analysis explained in a training course of their choice , as they hone skills for exit and entry. Our next topic will be entering as well as exciting congestions.
Author: Ted Hearne is a Forex and bond trader who has written extensively about trading and has coauthored a technical analysis explained course called "Drummond Geometry". His biography and further information about his work can be found at the technical analysis explained website.