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Chapter 19, Part I. Harmonic Approach to Recognizing a Trend Day Page 2

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Commander in Pips: The point is that very often traders make countertrend trades. They decide that the market is oversold and it is time to buy or overbought and it’s time to sell. During trending sessions, this could lead to huge financial losses and negatively impact the trader’s mind-set. The major mistake that they do is to always act as in previous trading sessions, when the market contracted. They think that while it worked great previously it will work with the same efficiency in the future despite the different nature of the current trading session. That is a serious mistake. We have to act differently, depending on the current session’s mood. Still, trending days are not very common to see. In a usual trading month there would be no more than 2-5 trending days on average.

    Pipruit: I see. So, it looks like this is very important, especially for countertrend traders. If they will see the trend day – it’s better to join it, or at least stand aside and do not try to go against it. This will definitely save a lot of money and nerves.
    Commander in Pips: Right. So let’s start with it and the first point in our program – how to recognize that this could become a trading day…

    Identifying a trend day

    As you remember, earlier we defined a trend as creating higher highs and higher lows for an uptrend and lower highs and lower lows for a downtrend. Such kind of price action could be seen on any timeframe. Still, larger trends on longer time frames start from smaller ones on lower time frames. The major property of a trend for any trading period is that the market usually opens on the low/high for that period and closes in the opposite side if up/down trend really has started.
     
    #1 Sive Morten, Dec 21, 2013
    Lasted edited by : Apr 17, 2016
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