Is the Trend really your friend or is it an Enemy in disguise?
I dedicate a special website at AskNateBrooks.com for people to ask questions where I focus on replying to questions submitted by dedicated entrepreneurs like yourself or people who are searching for a way to get themselves above all this financial crisis issues. Today, my goal is to simply help you figure out how to begin to understand the key distinctions of having a trading methodology that is Trend Identification based versus Trade Setup based.
Please feel free to call me at 512-748-4237, after taking some time going through this site’s materials, if you have sincere interest in changing your financial future with our Trade and Grow Rich Program. This is my real phone number and I am willing to help you build a financial wall around yourself and your family. Our focus at www.natebrooks.com is to mentor and coach people(novice and professional traders) to achieve success rather quickly with The Nate Brooks System to Trade and Grow Rich with a Harvard MBA.
I still do my private, one-on-one, mentoring sessions with clients that prefer interacting with me on a one-on-one basis. For those students I recommend that you start at the top right of this website and start reading the information, after reading through the materials that I provide for you on this site, as a service to you, then please feel free to pick up the phone and dial 512-748-4237 to speak to me if you have an interest in private mentoring.
The Trend: Friend or Enemy?
For years, traders have been told by all the experts that the trend is their friend. Yet, traders have still not been able to figure out exactly what is a trend nor how long a trend is suppose to last. One of the reasons I believe traders are perplexed and confused about the word… “trend”…is because most of the time the educator is NOT very specific about the word because they are trying to make and explain a different topic or viewpoint about something else such as an entry trade setup or an exit strategy.
However, this lack of specificity about the word “trend” causes the student to not really know what is meant by the word “trend”…so the dangerous part is that the student just assumes they know what the educator means when they say the word “trend”. And, this is just the beginning of the problems that come from that initial lack of specificity about the word “trend”.
Other than the simple statement’s such as the higher timeframe’s trend has influence over the lower timeframe’s trend and that you want confluence between those two timeframe charts, most of the information does not really provide much more depth of information about how to properly use the “trend” when Intraday Trading.
When you look at the charts a stock, commodity or index future over various timeframes, you may notice things like the multiyear trend could be up, while the current year’s trend may down and the monthly trend could be down as well, and the weekly trend could be headed sideways while the daily trend could be headed sideways or going up. So, the real question you should be asking yourself is…which trend is going to have an influence on the trade setups that you will be taking in your upcoming trading session if you are day trading or if you are swing trading?
Most trading system’s have some type of definition of the trend for the trade setups that they are teaching their students. For example, you may see some traders with scalping systems define the trend as the trend of the 20 period moving average on the 3 min chart and then, when you have confluence of the trend on a shorter timeframe chart and a trade setup, their system says for the trader to execute their trade. What confuses the traders, who are following a system like this, is when everything lines up per the trade setup and in confluence with the higher timeframe 3 min chart and then, the trade setup does NOT work. Many times, when this type of scenario occurs, it could be due to a pattern triggering on a higher timeframe in the opposite direction or the trade setup is occurring at a significant resistance or support point on a higher timeframe. What this means is that this particular trading system does NOT properly account for significant resistance/ support areas on higher timeframes…and this type of thing causes frustration and causes traders to begin to doubt their trade setups.
Let’s make sure you understand what has really happened here…because it happens with many trading systems, inadvertently…meaning that…the particular trading system was designed with the underlying importance of entering a trade being the trade setup first and then being in alignment with an immediate confluence of the trend in two “relative short…in the noise” timeframes second.
Another way of saying the same thing is this…if you find your trade setups, even though they may look perfect in your timeframe (especially, if it is in a relatively lower timeframe, which means the price action is really caught up “in the noise” of a trend on a longer timeframe) not working like you have been told they should be working or how you thought they should be working, there is a high probability that you being caught “in the noise” and influence of factors occurring on a longer term timeframe.
It is difficult to answer the question in isolation of whether the trend is your friend or enemy… the question is which trend? If your trading system, like most of them have been designed, is a trade setup designed trading system…most likely the trend will always be both your enemy and your friend…the problem is that you won’t know exactly when it will be in alignment with all the “friendly” trends versus when the longer term timeframe will act as an “enemy” to your current trade setup. So, you will always be exposed to the possibility of doing everything apparently correct and the market making you pay any way…which will play mind tricks on you at some point in your trading career.
Most trading systems have been designed with the trade setup as its first priority and then, the better ones attempt to add some type of important trend confluence component as an additional trade setup criteria. Please note…this is not the ideal way to design a Intraday trading system…it should happen in the reverse order…meaning when the system was first designed…it should have been designed to identify the significant Intraday trends and the factors that influence the movement of price action, as changes in Intraday trends occur and then after that, you then, look for the trade setups.
Trade and Grow Rich Trading System…has been designed…so the Trend IS Your Friend
The Trade and Grow Rich Trading System was designed integrating the confluence of three independent trend trading methodologies based on three completely different longer term, intermediate term and shorter term trading criteria which accounts for the various timeframes that influence Intraday trading setups. What this means to traders is this…all the trade setups in our system have been designed and developed AFTER you know the combined directional influence of the major factors that influence the trend while trading on an Intraday basis.
In short, another way of stating this is that this system was first designed to make the trend your friend…and then, for you to take trade setups that make sense based on already knowing the combined directional influence of the major factors that influence the trend, while trading on an Intraday basis.
Our students have the confidence to take their trade setups, without second guessing themselves, knowing that the odds are extremely high they are taking their trades in the correct direction. This is a major advantage (an edge over other traders) when trading on an Intraday basis.
One of the keys to trading with our system is that we have a specific trade setup called the Anaconda Trade Setup which acts as our main filter to determine the primary directional influence of the longer term timeframes on the upcoming Intraday trading session. As part of our every day preparation, we look for the directional influence of the most recent Anaconda Trade Setup. With this information, we are able to determine path of least resistance for Trend trades and we will also know what is now considered a CounterTrend trade. Aligning our trades with the most recent active Anaconda Trade Setup, gives our traders an edge in the marketplace.
I teach the details of this methodology only to the students who complete our entire mentoring training program. I want them to have the edge when trading on an Intraday trading basis.
In this document, I wanted to make sure that you, as a trader, understood that the word “trend” can be very complicated, and it is certainly much more complicated, than most traders realize. You should make sure that you spend some time researching and studying this aspect of trading because it will make a huge difference in your overall profitability as a trader. If you are not a student of mine, please do yourself a favor and take some time to study this aspect of trading…obviously, the best way is to enroll in our course because everything has been designed to handle this issue right from the initial design…otherwise, continue reading.
Let’s look at some of the ways that the word “Trend” can be defined or could have an influence on your trading…especially, if you are using a trading system that has trade setups as your primary entry method into the Intraday market…here is a short list of some things to consider and research so you can come up with some good answers for your trading plan so that you know how to make the trend your friend and increase your profitability:
1. For your trade setups, what higher timeframe’s trend direction are you using to filter the trades on your entry timeframe…and, why?
2. For the first down leg trend on your entry timeframe, when do you specifically enter a trade in the down direction and how do you do that…meaning what is your specific criteria for entry?
3. Exactly at what point does the trend end on your entry timeframe chart? What do you do when that point is reached?
4. What criteria do you use to determine if the market is shifting into a trending market?
5. Do you know how to recognize when the market is going into a rotational mode, from a trending mode?
6. Do you know which countertrend trades are high probability trade setups?
7. Do you know how to determine when the trend is most likely to end?
8. Can you identify when the market is transitioning and when it is coming out of its transition phase and starting a new trend?
9. Do you know how to identify when the market established itself as a slow grinding one directional trending day?
10. Do you know how to tell if a trend is accelerating at a faster rate?
11. Do you realize there are FIVE different types of divergences…regular divergence, reverse divergence, slope divergence, complex divergence and hidden divergence…and more importantly, do you know how to determine its influence on your upcoming trade setups?
12. Do you know how to properly separate your charts based on timeframes so that you understand the differential impact of the trend on your entry chart?
Surprisingly, many traders are trading without knowing the answers to these types of questions. As you can see from just this short list, understanding the trend would be very beneficial to master if you want to be a profitable trader. You can’t keep doing the same things hoping to get better trading results. You have to take the time to do the work to get the answers that can help you become more profitable. Trading is a great business when you are prepared and you learn as much as you can about the vital topics that can impact your trading career.
The bottom line for you, or anyone for that matter is this…if you want to get different results…you have got to make different decisions…you have to “do the deal”…you have to “do the disciplines”…you have to focus on disciplines of “being and doing” things the right way…you can’t be lazy…you have to pick yourself up off the couch and put yourself back on the court of life…you have to get in the game and start doing something…getting into action…stop being scared…go for possibility in your life…because anything is possible for those who believe and get into action and commit to themselves that they will make New Decisions and Get New Results!
Do you realize that you don’t have to settle for less? Do you realize that NOW is the best time to take advantage of learning the skills needed that can make your financially independent? Have you taken a moment to see the fear in people older than you…you know… the ones who still have to work at Walmart at age 72 or the ones working as waitperson’s at your local restaurants? You don’t have to have any specific trading knowledge right now…we can teach you from scratch… you don’t have to be afraid. Do you realize…that you can do something about your situation…and that’s right now? It takes courage to change your life…but, the first step right now is fairly straight-forward…simply pick up the phone and dial 512-748-4237 and I’ll help you get your questions answered with straight-forward answers that should help you whether or not we work together.
Trading is the best “one person” business in the world. Go to www.natebrooks.com to start learning how to take control of your finances and your life. If you have any other questions, please feel free to submit your questions to www.asknatebrooks.com, I will be happy to provide you with the answers to your questions.
- Nate Brooks