Does it all mean that markets are not trending today? Of course they are
trending! Trends exist and they can be traded up and down for profit. There will
always be short-term trends in any market, the only question is when! So, the
big question is…”how do we find the best trending market and not miss the
opportunity of taking trading signals in the direction of a strong trend?” You will
find a definite answer soon.
The belief that trend following is an outdated trading technique is only partially
true. It is true that there is hardly any market with clear overall trend direction.
You could follow the temporary trend only if you are able to determine the
trend correctly. This is the point where so many traders fail. A pair moving up
on a 30-minute time frame can act exactly contrary on an hourly time-frame.
Even if you find a rare coincidence – a currency pair moving in the same
direction on all time frames – you still need to know “how well” the market
is trending to avoid very short-term trends. The solution is smart and simple.
How to increase the profitability of any system
Before you discover the most simple and effective method to determine the
trend, let's see what it’s good for. All the trend following systems are based on
one common approach:
“Buy the dips in an uptrend and sell the rallies in a downtrend. ”
Let's reveal one simple trading system that actually made a fortune for one
famous trader and his investors. The system “Donchian 5 & 20” is named after
him. Here is the set-up.
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