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Technical Analysis Trading - Will the Trend Continue or Will it Stop?

By: Jimmy Dawkins

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So you have started to trade and you have developed your stock trading strategy . You have completed your initial technical analysis trading and after some consideration you've deciding on trend trading for the style you prefer .

Trend trading is an attractive strategy for sure . Look at a stock chart retrospectively and the trending patterns jump out at you . You get excited about catching a trend in the beginning and then riding it out to its conclusion months later . Success is ahead of you and that money calls you!

Trading isn't so easy in reality . You manage an entry - maybe you are late or maybe you have managed to enter near the beginning of a trend , but you do make it on board . Now that you are in the trade you move into a small profit as your predictions start to come true . Then a strong day comes along and the stock hits resistance and the market stops dead . You just let yourself think there is more ahead and you can't make the entire move in one day anyway and so you add to your position . But alas the following day the market opens up , goes nowhere for a while and then quickly heads south . Because you decided to add to the position you head back to break even fast and in fact by the time you have orders in place you have taken a loss . What happened ? How could you tell before it happened that the trend wouldn't continue and that you should have taken the profit when the market started strong and then paused ?

Here are several tips for trading that will help you tell when a trend is going to stop or continue on. If you use them with your technical analysis training you will be well ahead of the game .

First and most importantly : to set your targets use higher time period charges ; look for logical places of support and resistance to know when the market is going to stop or start.

If you do not know how to predict where future areas of support and resistance exist , or you're not sure how to coordinate within trading your time frames, then consider using technical analysis trading course for instruction . Drummond Geometry is one of the best but many different valid schools or thought are out there.

Another element that is needed is a tool with which to make judgments about the strength and robustness of a trend . A strong trend will break through resistance or support and a weak trend will stop and either go into sideways congestion at a point of resistance or support or it could start going in the opposite direction. If in the analysis tool kit you have the perfect tool you'll be able to figure out which action is more probable ; if you do not have the tools then you have to wait and see , and there's a good chance you'll be disappointed .

You need to use momentum tools to appropriately measure this and then apply them to a smaller timeframe then the one you are in ... in other words if you're trading a daily chart, with your trades try to pick the day's high or low, then to support the decisions you make intraday, you look at the hourly or half hour charts.

We will continue this discussion in part 2 of the technical analysis trading series.

Author:
Peter Markham is a Forex and financial futures trader with 30 years practical experience in the markets. He received his education in Sydney and Los Angeles and has been a trading consultant worldwide. He has written widely on Technical Analysis Training Course. Among many possible technical analysis courses Peter recommends www.drummondgeometry.com for an original and productive trading approach.

Article Source: http://depositarticles.com/

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