Four important facts about trend trading

1. it's the safest way to trade--to trade with the trend

2. trends move markets and are the basis of all profits

3. it's miserable being a trend trader, you lose 67 percent of your trades!

4. there are two ways to trade with trend

   1st. trading breakouts in the direction of the trend: 

    * never missing a big trend

    * using large stops

    2nd. trade retracements

     * possibility of missing big trend

     * using small stops

 Trading breakouts of higher prices or lower prices in the direction of the trend, such as the popular Thrtle channel breakout strategy, is a successful strategy for trading with the trend. Breakout strategys do not wait for a retracement or pullback in an uptrend before entering the market on the long side. Nor do they wait for a relief rally or retracement in a downtrend before entering the market on the short side. They will buy much higher prices in an uptrend, and they will sell much lower prices in a downtrend. The advantage of trading breakout is that the trader will never miss a big trend. A disadvantage is that breakout trend trading requires larger stops than retrancement trend trading.

 Retracement trend trading requires the market to pause and experience a pullback in an uptrend, or a relief rally in a downtrend to enter the market. A disadvantage of retracement trend trading is that sometimes strongly trending markets do not provide a retracement opportunity for a trader to enter in on. Retracement trend trading can and does miss some big trends. However, an advantage of retracement trend trading is that it does allow a trader to place much smaller initial stops.

* It's All About Support and Resistance

At its core, practical retracement trend trading is about finding areas of support to buy and finding areas of resistance to sell. Not only is trading about identifying support and resistance level, but it's about identifying good support and good resistance levels. A good support level will exit in, and confirm, an uptrend. A good resistance level will exist in, and confirm, a downtrend.

These definations encapsulate the essence of successful retracement trend trading. When in an uptrend, traders should only be looking to identify good support levels for entering long trades. When in a downtrend, they only be looking to identify areas of good resistance for entering shorts.

In addition, traders need to accept a core belief about price movements: Prices do not move in a straight line. They meander up and down.

 Prices will rotate back and forth and will not head in one direction, either up or down, in equal and discrete linear measurements. Uptrends will experience rallies and pullbacks. Downtrends will experience falling prices and trlief rallies.

 Markets do not head in one direction without pause. Successful retracement trend trading, will see traders enter long positions after pullbacks in an uptrend and enter short positions after relief rallies in a downtrend.

An important factor in retracement trend traders' success is their patience in waiting for pullbacks and relief rallies, that  is, retracements of the previous price trend. They know that in uptrend, the market needs to come down first to go up. They know that in downtrend the market needs to go up first to come down. Practical retracement trend trading is all about patience in waiting for markets to come down to areas of support in an uptrend before entering longs and waiting for relief rallies in downtrend to find areas of resistance to sell. Practical retracement trend trading is nothing more and nothing less.

* Why Trend Trading Should Be Simple

Trend trading should be easy, although many do find it hard. Trend trading is so easy, or should be, that it can broken down into three clearly dsfined and comptible parts:

# the philosophy

# the objective

# the execution

Know these and you know how to trade with the trend. Easy! The pholosophy believes that:

* In an uptrend prices need to come down to go up

* In a downtrend prices need to go up to come down

The objective is:

* If the market is in an uptrend, then the trader needs to locate a good supptor level to enter a long position and catch a continuation of the uptrend

* If the market is in a downtrend, the trader needs to locate a good resistance level to enter a short position and catch a continuation of the downtrend.

The execution comprises a two step process:

a. Locate a trade setup

--Identify the trend.

--Wait for a retracement level

--Wait for a retracement pattern

b. Implement the trade plan:

--Wait for a confirming entry signal

--Entry the market

--Place a stop 

--Manger the trade

--Hopefully take profit

Many people incorrectly believe the objective of trading is to pick the market direction correctly, to make money. It's not. It's actually far from it in truth.

As a trend trader, you only trade for the opportunity to earn expectancy, not to make immediate profit, not to be right. You don't trade to pick the market's direction. You trade for the opportunity to earn expectancy, which can only come from executing many trades over a long period.

* How identify the trend?

A good trend tool should independent of the trader. A good trend tool will be 100 percent objective, and will not rely upon any subjective interpretationon or input. A good trend tool will stand on its own feet, and will not require any subjective massagingfrom the trader to make it work.

A good independent trend tool will then eather work ,or it won't. It won't need any variable massaging to make it seem to work. 

An uptrend is defined by seeing higher swing lows. When a lower swing low occurs, the uptrend changes to a downtrend

A downtrend is defined by seeing lower swing highs. When a higher swing high occurs, the downtrend changes to an uptrend.