Brandon Wendell, CMT
Brandon Wendell
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
EUR/USD hovers around nine-day EMA above 1.1800
EUR/USD remains in the positive territory after registering modest gains in the previous session, trading around 1.1820 during the Asian hours on Monday. The 14-day Relative Strength Index momentum indicator at 54 is edging higher, signaling improving momentum. RSI near mid-50s keeps momentum balanced. A sustained push above 60 would firm bullish control.
GBP/USD holds medium-term bullish bias above 1.3600
The GBP/USD pair trades on a softer note around 1.3605 during the early European session on Monday. Growing expectation of the Bank of England’s interest-rate cut weighs on the Pound Sterling against the Greenback.
USD/JPY drops back below 157.00 on Japan's verbal intervention
USD/JPY has come under moderate selling pressure below 157.00 in the Asian session on Monday. The Japanese Yen lost ground to near 157.70 following Japan’s ruling Liberal Democratic Party's outright majority win in Sunday’s lower house election, opening the door to more fiscal stimulus by Prime Minister Sanae Takaichi. However, JPY buyers jumped back and dragged the pair southward on FX verbal intervention by Japan’s Finance Minister Katayama.
Editors’ Picks
USD/JPY drops back below 157.00 on Japan's verbal intervention
USD/JPY has come under moderate selling pressure below 157.00 in the Asian session on Monday. The Japanese Yen lost ground to near 157.70 following Japan’s ruling Liberal Democratic Party's outright majority win in Sunday’s lower house election, opening the door to more fiscal stimulus by Prime Minister Sanae Takaichi. However, JPY buyers jumped back and dragged the pair southward on FX verbal intervention by Japan’s Finance Minister Katayama.
Gold eyes acceptance above $5,000, kicking off a big week
Gold is consolidating the latest uptick at around the $5,000 mark, with buyers gathering pace for a sustained uptrend as a critical week kicks off. All eyes remain on the delayed Nonfarm Payrolls and Consumer Price Index data from the United States due on Wednesday and Friday, respectively.
AUD/USD: Buyers eyes 0.7050 amid upbeat mood
AUD/USD builds on Friday's goodish rebound from sub-0.6900 levels and kicks off the new week on a positive note, with bulls awaiting a sustained move and acceptance above mid-0.7000s before placing fresh bets. The widening RBA-Fed divergence, along with the upbeat market mood, acts as a tailwind for the risk-sensitive Aussie amid some follow-through US Dollar selling for the second straight day.
Top Crypto Gainers: Aster, Decred, and Kaspa rise as selling pressure wanes
Altcoins such as Aster, Decred, and Kaspa are leading the broader cryptocurrency market recovery over the last 24 hours, as Bitcoin holds above $70,000 on Monday, up from the $60,000 dip on Thursday.
Weekly column: Saturn-Neptune and the end of the Dollar’s 15-year bull cycle
Tariffs are not only inflationary for a nation but also risk undermining the trust and credibility that go hand in hand with the responsibility of being the leading nation in the free world and controlling the world’s reserve currency.
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