There is a strong reason for writing so many articles “on trend” about trade. The reason for this may be the most important thing you can do to put the odds in your favor when it comes to trading success.
Still, many traders forget this trading wisdom or do not think it is important. Thus, most traders fail.
One of the biggest complaints I’ve read about “trading with Trend” is that it’s all relative. That is right! It depends on several factors, such as the time frame of the table you are analyzing, the time frame you want to trade, and what you do (the method) to determine the trend.
Some argued that the definition of a trend was “subjective.” This is not true.
The definition of a trend is very clear and objective.
It is the “Bull” trend that you have higher swing bottoms. The “bear” trend is where you have lowered tops and bottoms.
So the only thing left here is to explain what the ‘swing’ is at the bottom or top.
In its simplest terms, a “swing” simply refers to a change in direction of a turning line. If the swing line moving from the new bottom to the new bottom is moved to the new peak, the last upside-down is considered the “bottom of the swing”. If the swing line moving from a new height to a new height is moved to a new descent, the final height is considered the “swing peak”.
The rules of movement of the swing line are simple. You must first decide whether it will be 1 bar, 2 bar or 3 bar based. A 1-bar swing represents more short-term swings, where bars 2 and 3 are used for longer swings that occur less than 1 bar.
So let’s say we want to isolate 1-bar swings. Start at the bottom or top of any significant market. In this example, we will start from a basic bottom.
Now, when a price bar is formed higher than the previous price bar, we call it a higher bar. Draw the swing line from the main bottom to a new high level. Now you will raise the line to that new highest level for each height that is higher than the height at which the line sits. However, if a price bar comes down from the previous bar, the line should go down from the last highest. For each downturn that occurs below the current low of the line, the rounded line moves up and down again until the price bar reaches a higher level again and the line ‘swings’ to this point. .
When the line rises to a new height, each bar in the bottom row is called the “bottom of the turn”. When the line descends to a new low, each bar in height is called a “swing”.
There will be times when the bar will be both higher and lower. These are called “outside” rods. To deal with them, we must first determine which day of trading occurred; new low-low or new high-high.
If at the beginning of the day it first formed the lower part, before closing it formed the higher-upper part, the line should be moved first down and then to the highest level of the outer bar. If not, move the line accordingly. However, this method will not apply to a 2 bar or 3 bar swinging approach.
By comparing these swinging tops and bottoms with previous peaks and bottoms, we can determine the trend for any given period of time. If we see a number of higher swing bottoms, the trend is “bullish”. If we see a series of low swing tops and lowered bottoms, this is a “bear”. It is possible that a swinging bottom is formed lower than before in a bull trend and is still considered a bullish trend. However, if it occurs below the last two, the trend has changed a lot. The opposite is true for bear trends. If the top of one swing is higher than the last, if not the last two, it can still be a bear trend. However, if it occurs higher than the previous two figures, the trend may change.
The rules for 2-bar and 3-bar swings require only a small adjustment. Instead of descending each new up or moving down each new, you must reach 2 (for 2 bars) or 3 (for 3 bars) before advancing the turn line.
Thus, if it starts from one bottom, the line will only move to the highest peak after the second highest level. Then, with a 2-form count, each new one would rise to the highest level, as long as it was not below any low. If the swing line moves upwards when it is formed upside down, it is equal to 1. After that, if a new one is formed higher (higher than the height at which the line sits), the line rises to that new height. and the down-count is reset again. However, if a new sub-row is formed that forms the number 2, and the line is reset from top to bottom, bottom to bottom, and top to bottom, unless it is higher-high (where the line sits). zero. The line then moves downwards with each new low, pulling the line back up to a higher number of levels of 2.
WD Gann called it the Trend-Line Indicator to identify the trend objectively.
When trading with Trend, you can use these swings as price points to adjust the rear stops. If a bullish trend continues LONG, each new uptrend is a price level that can be moved immediately below a stop-loss to protect accumulated profits. In a bearish trend, QISA presents a price level at which a stop-loss can be moved from the top to the bottom of each swing.
Price provides the highest success rate as it tends to move in the direction of the trend rather than counter-trend movements. In addition to a simple stop-loss strategy, you already have a simple method to determine the trend. Use only or other methods you deem useful.