Has it gone too far? 3 Trend Trading Tips
Am I too late to get in?
At the moment we are in a trending market, this should be the perfect time to trade.
What happens in reality is people decide to trade against the trend, because they don’t believe it can go any further. What usually happens is those traders enter a perilous trade and can end up putting their whole account at risk. So when is the right time to buy into a trend?
Firstly we need to see if the trend has been going for a long time, and is making regular new highs, and the lows are higher also (or opposite in a downtrend). A typical example is USDCAD at the moment which has been trending nearly perfectly for near 4 months. I have written about it, and given predictions on it in this very blog multiple times.
Secondly, we can wait for a pull back. Simply a reversal movement, and we need to keep a hawk-eye on the recommencement of that move.
Thirdly have a set of rules and enter with them. Whether it is an RSI, MACD, SMA cross or waiting for the price to make new lows — have your conditions to get in and use them.
Another great time to enter can be after a news event, wait a few minutes to make sure that the news is going the right way, and then enter.
Be sure to take some profit and leave some of your position in there to take advantage of being in the trend!
Remember trading the trend doesn’t mean you can ignore every economic news release, or support and resistance levels. It will however make your life a lot easier, and less stressful.
Andrew “Davies” Nifield
Head of Education — www.gsimarkets.com