How to Trade the Market Trends in the right way

Everybody knows the famous quote “Trend is your friend” but, who really knows HOW to trade the market trends?

In this article, I will explain two easy way to trade the trend:

  • Breakout trading.
  • Swing trading.

Let’s start!

Identify the Trend

First of all, to trade the trend you need to identify a trend!

You already learnt a lot of methods to identify the trend:

  • With the cyclical moving averages.

    Trade the trend MA

  • With the speed of the cycles.
  • With one of the 7 Cyclical Indicators included in the Hurst Cycles Course (Check it out here)

    Trade the trend indi

Choose your favourite one and go the next step.

How to Trade the Trend

There are two ways to trade the trend and, most of the common trading strategies, are based on these two principles:

  • Breakout trading.
  • Swing trading.

Breakout Trading

When you trade the breakouts you’re speculating on the power of the buyers to overcome the selling pressure at each resistance and to move at the next one.
The opposite for the support.

Let’s see an example:

Trade the trend breakout

There are few ways to trade the breakout:

  • Directly sell or buy Support & Resistance with stop orders. (High-risk approach)
  • Use the ATR. (Conservative approach)
    When the price breaks the level of more than the ATR value you can consider the breakout confirmed and open a position.
  • Trade the breakout of the Bollinger Bands or Donchian Channel.
    This method has been used by the famous Turtles traders and, instead of using support & resistance, it uses the volatility breakout.

Example:

trade the trend bollinger

RE-TEST Trading Strategy

In this strategy you're trading on the on the Re-Test of the broken levels. The sequence will be:

  1. Identify Support & Resistance (Condition)
  2. Breakout of the level.
  3. Re-test it (Where you open the position)
  4. Start again in the direction of the breakout. (When your position start to show the profit)

This is a more conservative way to trade the trend and it's mainly used in the swing trading strategies.

trade the trend HOLD

You can trade the hold of support and resistance in few ways:

  • With limit orders on the price levels. (risky)
  • Using other confirmations such as the turn of the stochastic (K > D), the breakout of a fast moving average (for example 2o periods) or movement of our cyclical indicator to +1 or -1.

Which trend trading strategy are YOU using?

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