Trend Trading

“The trend is your friend”…Haven't we all heard this one before? When you are on the wrong side of the Market, the trend can seem like your worst enemy. The question is: How can you develop a nice, cordial and long lasting friendship, with this seemingly fair weather friend? The answer may be patience. It is difficult to force a friendship on someone. They may not be receptive. But if you wait until you have a common goal, in this case EUR/JPY wants to go up, and you also want it to go up, then you may enjoy your time together. The Day Trader may be friend the 3 to 5 Minute Charts, while the Swing Trader makes friends with the 30 or 60 Minute Chart and the Position Trader looks to embrace the 12 Hour or Daily Charts. The Day Trader who forces a friendship with the Charts of the Swing Trader, may end up like a high school freshman who wants to hang around with the seniors, they will soon find that they really do not have common interests and their friendship will fade.
When you have the patience to stay within your circle of friends, then identify when you have a common interest, you may find there are many enjoyable moments along the way. The best part of a good friendship is that you can rely on an old friend, and trust that they will always be there for you, When we look at a recent Chart of the EUR/JPY we see where the Day Trader, who has made friends with the short term charts, sees an area where the trend is defined as up, by the crossover of two longer term Moving Averages. So, the trend is up and you would like to be friends with this trend, so you join your friend for some short term fun. You like to have fun too, so when the Market gives you a chance to join in, you choose to do so at closer to an average price, so you are not paying too much for the privilege. On the other hand, when you decide that you think the fun is over, and speculate that the trend will end, you can see how quickly your friend can turn on you and become your enemy. Best Wishes to you and your new found friend and Happy Trading!