Chapter 18

Example of How to Trade a Trend

When the market is in a trend, traders should look for any reason to enter. The simple existence of a trend is reason enough to enter at least a small position at the market. Here are some other reasonable approaches that use stop entry orders:

  • Buying a high 2 pullback to the moving average in a bull trend.
  • Selling a low 2 pullback to the moving average in a bear trend.
  • Buying a wedge bull flag pullback in a bull trend.
  • Selling a wedge bear flag pullback in a bear trend.
  • Buying a breakout pullback after a breakout from a bull flag in a bull trend.
  • Selling a breakout pullback after a breakout from a bear flag in a bear trend.
  • Buying a high 1 pullback in a strong bull spike in a bull trend, but not after a buy climax.
  • Selling a low 1 pullback in a strong bear spike in a bear trend, but not after a sell climax.
  • When a bull trend is very strong, buying on a stop above a prior swing high.
  • When a bear trend is very strong, selling on a stop below a prior swing low.

Entering using a limit order requires more experience reading charts, because the trader is entering in a market that is going in the opposite direction to the trade. However, experienced traders can reliably use limit or market orders with these potential setups:

  • Buying a bull spike in a strong bull breakout at the market, at the close of every bull trend bar in the spike, or on a limit order at or below the low of the prior bar (entering in spikes requires a wider stop and ...

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