There are generally four stages of a trend. Starting with the uncertiainty of a new trend, then going into a fully charged trend, then slowing down its speed as it matures and finally crumbling and ending of the trend.
You should go in about Stages 2 and 3 where there is still room for more price movement in the
trend direction for your profit.
Before joining that trend, first you will need to know the strength of the trend.
Measuring Trend Strength
There are mainly 2 ways to measure Trend Strength
1) Trendline Gradient
2) Correction or consolidation before the resumption of the main trend
Trendline Gradient
Rule of thumb is that the steeper a trendline, the higher the chances of a trendline break. Which could slow the pace of the trend or trend reversal.
Correction or consolidation before the resumption of the main trend
A trend is assumed to be reobust if the corrections are short and consolidation periods are narrow.
Narrow consolidation periods are another strong continuation sign for the main trend. These consolidation periods may look like rectangles or gflags on the price charts.
You should go in about Stages 2 and 3 where there is still room for more price movement in the
trend direction for your profit.
Before joining that trend, first you will need to know the strength of the trend.
Measuring Trend Strength
There are mainly 2 ways to measure Trend Strength
1) Trendline Gradient
2) Correction or consolidation before the resumption of the main trend
Trendline Gradient
Rule of thumb is that the steeper a trendline, the higher the chances of a trendline break. Which could slow the pace of the trend or trend reversal.
Correction or consolidation before the resumption of the main trend
A trend is assumed to be reobust if the corrections are short and consolidation periods are narrow.
Narrow consolidation periods are another strong continuation sign for the main trend. These consolidation periods may look like rectangles or gflags on the price charts.
Trading a trendline bounce can be very proftiable , yet simple, strategy for joining an existing trend as it provides a relatively low-risk entry point for traders, Here are the steps of this strategy
1) First determine how long you wish to ride the trend for because that will influence the time frame of the trend you will ride on.
2) Make sure taht the current market sentiment agrees with the technicals. If not,
3) Note the gradient of the trendline in both the time frames and the number of times it has been tested.
4) Confirm trend direction and trend strength with oscillators.
5) Enter a limit entry or market entry order based on the hourly or dily trendline, depending on your preferred tim horizon.
6) Place stop-loss orders at least 20 pips on the other side of the trendline.
