Monday, 14 May 2012

The Best of All Trading Places is a Trending Market

The Best of All Trading Places is a Trending Market

It should be the easiest place to trade in a trending market but most people find it very difficult to follow a trend. 

Definition of Trending Market
1. It stays out of the AIMS Gator's mouth. 
2. Its pullbacks are less than its thrusts
3. It will contain more green candles in an up trend and more red candles in a down trend. 

Why the Purple Line: 
We want to trade in the direction of the higher time frame but we also want to trade when the higher time frame turns around. So on our current time frame we keep our trades at least above the Red Line of the 5x higher time frame. For that we have the Purple plotted on our current time frame. (more on this in the eBook)

Trading in a Trend
What Trades to Take in a Trending Market

Only those in the direction of the trend. 

1. With the Elliott Wave
We use eWave (1 second Elliott Wave Indicator) or AIMS Wave (10 Seconds Elliott Wave Indicator) 

2. Without the Elliott Wave
It is not neccessary to trade with Elliott Wave, since Elliott Wave is made of Impulse and Corrective waves. When Price is going away from AIMS Gator and its mouth is open its an impulse wave. When price starts coming back to AIMS Gator's mouth that is a corrective wave. So Trade away from AIMS Gator's mouth and in most cases you'll end up trading either Wave 1, 3 or 5. (all impulse waves.) Impulse waves are the ones that move the market or rather when the market really change price in a sequence it is called an impulse wave. 

Problems of a Trending Market
1. How to handle the Pullbacks (Grants Favourite)
2. Must make an executive decision of whether or not you are committed to this trend. 

Strong Longs or Strong Shorts: If you are committed to the trend, and you have confidence in your position you have more staying power. 
Weak Longs and Weak Shorts: If you don't have the ability to be committed to the trend don't have confidence in your position, you have less staying power. 

Important Question:
Where to put your Stops in a Trend?

> The Confident Well Financed Trader: Where you put your stops depends upon whether you are strong or weak long/short. If you have confidence in your position, you have all the grounded assessments for staying in the trend, then it would be foolish not to follow the trend. Remember the Holy Grail is "Want What the Market Wants" 

> The Scared, Unsure, Afraid Trader (we all get there one time or another): The most valuable commodity you will ever deal with in your life is your perspective. 
You want to watch your perspective closer than any other market or any other commodity in the world. If you find yourself in unsure afraid place you may want to just exit the market ,get out and come back when you're feeling better.

Remember to Ride the Alligator As long as it allows you.