How to Get on the Trend
After identifying a trend through your strategies’ criteria (e.g., good move, shallow pullback), there are three main methods to enter the market:
Ok, so, now, how do we get on the trend?
We have discovered, we have filtered out what is a trend in this Strategies Criteria, good move, shallow pull back etc.
How do we get on it? Well there is three ways of doing it.
Number 1 is the 20 period exponential moving average method or SMA, or whatever moving average method. The theory of this is we buy as the price touches that 20 period moving average, this is on a one-minute chart by the way guys, after your trade criteria is met, and we saw those on the earlier slide.
20-Period Moving Average Method
- Setup: Use a 20-period moving average (EMA, SMA, or other variants) on a one-minute chart.
- Theory: Wait for the price to pull back and touch the moving average after meeting the trade criteria.
- Entry: Enter the trade when the price interacts with the moving average, e.g., a bounce or touch
Number 2, the wick method.
We talked about how a candlestick is formed so what we want to do, is, we are looking for a good wick to form and we are taking a trade on the close of that bar. So if we get the pullback, we then see a candle which forms like this, in other words we push the lows, we change direction pretty much straight away, in the one minute, we are looking to buy after the close of that one-minute period. That’s very structured, very focused, that’s very fixed, there is no room for ambiguity on that and number 3 is the small trend line method.
Wick Method
- Candlestick Analysis:
- Focus on how a candlestick is formed during a pullback.
- Look for a wick (or tail) that suggests a rejection of lower prices.
Entry:
- Wait for the one-minute candle to close.
- Enter the trade after the wick forms, signaling a potential reversal.
Example
- The candle pushes to a low (forming a wick).
- It reverses direction during the same minute and closes higher.
- You enter a buy position after this candlestick closes.
Number 3, Small Trendline Break Method
- Setup: Draw a small downtrend line during a pullback within the larger trend.
- Entry:
- Wait for the price to break above the small downtrend line.
- Enter the trade as the price moves in the trend’s direction.
We wait for a break of the small down trend line to the upside. So if this is our down trend, and we drew our trend line as we did earlier on, we wait for a break of this here and we are buying that move to the upside.
Anyway let’s have a look at some little examples on charts and we can visualise it a little bit better. Ok, so here’s some that we have just pulled out. The 20 period moving average, we know what know what a moving average is, we have that on a one-minute chart. We have a drive lower, we have a consolidation, and we look at this example here, you can see we have a little wick to the upside, or a little tail or whatever you want to call it that’s popped through that 20 period moving average, its tagged it, just touched it. So we have got both criteria met there and then we get the down drive. So it’s a nice short trade on that one.
Similarly, here you can see we have had a good drive lower, heavy volume, I haven’t put the volume on this chart but I wouldn’t have picked it out if we didn’t have it. The 20 period moving average is catching up, price comes up, touches it, we form that little tail, that little wick, then we rollover straight away. Very nice trade set up there.
