Most traders have heard that saying “the trend is your friend” before. In our classes at Online Trading Academy, we teach students not only how to trade with the trends, but how to identify the potential beginning and the end of those trends. One of the unique advantages of the Professional Trader Course is that we allow our students to trade live with our capital. This serves many benefits. The most obvious benefit is that the student gets real life experience in trading live and can feel the emotions that go with every push of the mouse click. The second, more important benefit though, is the ability of the instructor to monitor the students’ grasp of the skills taught and to be able to identify and correct trading errors before the students risk their own capital.
Free WorkshopIn analyzing many new traders’ performances I have seen a disturbing pattern. I notice that they are willing to enter long and short positions in the same security, in the same trading day. When I analyze their trades with them they quickly see how one side of the market was much more profitable than the other. So, why do we try to fight the trend instead of embracing it and trading in the safer, more profitable direction?
The trend can be divided into two distinct parts: the impulse and the correction. The impulses are the smaller moves in the direction of the larger trend, and are what we should be trading. The corrections are the pauses in the trend and may move sideways or opposite of the trend. These corrections allow traders the opportunity to re-enter into the dominant trend direction before the new impulse.
Impulses demonstrate several characteristics: they have fast moving prices, they tend to have larger candles and they may have gaps in the trend direction. Overall, they are violent moves that cover large price advancements in a short time period. Kind of sounds like you would want to trade with them, right?
Corrections differ greatly in that they are slower moving and cover less price action. These are riskier to trade in that if traders do not exit in time they will be on the wrong side of the new violent impulse. Corrections can usually be measured by supply and demand levels on the current time frame, a return to a moving average or trendline, or even Fibonacci retracements.
There are many techniques we teach in our classes to identify the current market environment. If you do not take the time to do this before putting your money into the market you greatly reduce your chances for success. Take the time to see where you are trading and trade with the direction that offers the greatest profit potential with the least amount of risk… the impulse. Use the corrective periods to set up for the next trade. If you are not sure how to identify these environments come to one of Online Trading Academy’s classes and learn. Trade with your friend, the trend!
Neither Freedom Management Partners nor any of its personnel are registered broker-dealers or investment advisers. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk. Also, Freedom Management Partners’ personnel are not subject to trading restrictions. I and others at Freedom Management Partners could have a position in a security or initiate a position in a security at any time.
Editors’ Picks
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
Google starts indexing Bitcoin addresses
Bitcoin address data is live on Google search results after users realized on Thursday that the tech giant started indexing Bitcoin blockchain data. However, mixed reactions have followed the tech giant's reversed stance on the cryptocurrency.
A Hollywood ending for fourth quarter GDP
The latest revisions put Q4 GDP at 3.4%, the second fastest quarterly growth rate in two years. Much of the upside was attributable to stronger consumer spending, yet fresh profits data affirmed it was a good quarter for the bottom line as well with profits up by the most since the Q2-2022.
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