Is common sense allowed in trading?
The answer to this question is ‘no’ – if you’ve been trained in some system of rules, which you’re meant to follow rigidly. The beauty of trend-following methods, is that it allows for a degree of common sense. Indicators are there to help paint a picture. Trend followers are not chained by indicators or rules.
There are some traders who cannot trade well without a set of rigid rules. It is not the purpose of this post to interfere with anybody’s chosen methods/plan/strategy.
In the inforgraphic below I follow up on How following a trend can work.
Trend following is about seeing the big picture to get at the big money. Just to be clear all that is said here is subject to acceptable loss positions – and having the knowledge, skill and experience in the markets. See also Comparison of trend following with other systems.
In essence there is a trend and there is a pattern in the trend.
Some key things operated here among others:
1. Keeping the trend well in sight.
2. Sound exits and re-entries based on the pattern in the trend.
3. A high RSI is not feared. It becomes an indicator of trend strength in these scenarios.
The is not meant to criticise or rubbish harmonic pattern trading. The infographic is only meant to show how harmonic setups can be limited in scope.
The information provided herein is opinion only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of investment. You are responsible for your own due diligence. To summarise, we do not provide investment advice, nor do we make any claims or promises that any information here will lead to a profit, loss, or any other result. All materials are for educational purposes only. We are clear in our SYP.
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