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Great site Kenny.

Technical Analysis written in a straightforward way so that everyone understands.

There's only a small few who get it consistantly correct and you are certainly in that group. Chris

Thanks for putting this all together and sharing! BHW

Awesome Stuff! Kenny has shown time and time again the ability to show us direction in these markets. Khalsa

Kenny, I appreciate your insight and analysis. You make sense of what I can rarely see.

Thanks for sharing.

Took a gold short at 1240 just closed at 1203 :-)))))))))))))))))) ........ top call!!  Gekko

Trend Trading

Technical Analysis of Stock Trends

How To Trade - Trends

Trend Trading is one of the most profitable strategies for trading the markets. The trick is to catch a trend near the beginning and run it as long as possible. That sounds pretty easy but how do you know when a trend is beginning and how do you know when it has run its course?

Generally speaking, markets will only be in a trending move around 20-30% of the time and the other 70-80%  will be spent confined in a range bound sideways consolidation. This can be very frustrating for a trader  who enters a trade trying to catch a trend only to find prices repeatedly fall back again. 

Using technical analysis of stock trends for trend trading is an ideal strategy for  how to swing trade and invest. Active traders can also use the same techniques for entries and exits for day trading on short term time frames on their intra-day technical analysis charts.

How To Enter a Trade

Trend traders do not try to call tops and bottoms. Instead, they enter a trade when price breaks out of a consolidation phase.This trading strategy means that the start of the move is missed but by waiting for a breakout as a clear signal of the markets true direction, failure rates can be reduced and the odds of entering a profitable trade are increased as trades are stopped out less often.  
Trend Trading

Trend Trading For Maximum Profits

Each time price breaks out of a consolidation phase it opens up a trend trading opportunity and In this example the initial buy trade is taken when price breaks out of the consolidation pattern at B1, an initial stop loss order is then placed at S1.

A second trade can be entered at the breakout level B2 and the stop level on both positions raised to S2 locking in some profit on the first trade and a small potential loss on the second. This is the point that trading trends can become very profitable. Further positions can be added at B3, B4 and B5
as the trend develops and with very little risk  Each time we add a position we must raise the stop levels respectively.

A less aggressive trading strategy is to only enter and run the initial one or two trades until they run their course. Stop levels should be raised in exactly the same way.

trend trading
Technical Analysis of Stock Trends

Trend Trading Exit Strategies

By raising stop levels as the trend progresses we will miss the absolute top and bottom. Some gains will be given back but this exit strategy is core to this type of trade. We can never know how far and how long a trend will continue for so we maximize profits by giving ourselves every opportunity to catch the full potential of the trend whilst protecting ourselves against a reversal in prices.

An alternative exit strategy is to use the trend lines and price channels as described in how to draw trend lines for trading trends   >>>, as a guide of when to get out of the trade.   

Traders tip - The optimum strategy for any technical analyst is always to let the market dictate when to enter and exit a trade. If we guess that the trend has reversed before a sell signal triggers then we run the risk of leaving a large part of the move on the table, perhaps even  the largest part of the move.

Who is buying up here?

How often do you hear the phrase 'who the hell is buying up here'. Total confusion from the traders who probably pre-empted things and got in way too early. They think that just because it went up a lot, then it is bound to come down again.

This is a complete nonsense and you just need to take a look back at the dot com bubble stocks to see that  There is no limit to how far up prices can go and that is what makes shorting stocks that much riskier. Buyers know exactly how much they can lose as prices can only go to zero.

The answer is of course that trend traders are still buying up there. They have very little to lose and much to gain.

The chart used in this example was a published here in real time - see what happened next  in - Trend Trading 2

Trading Trends for maximum profit. - Trend Trading 2

Trend Trading

london stock exchange
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