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Which Indicators are a must have for Trend trading?

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msc0015
248
msc0015  
Thoughts?
Michael Maggi
1674
Michael Maggi  

It really depends on what kind of trader you are because in my view indicators are only helpers.  Of course this is because of the kind of trader I am -- I use experts and indicators to get me into trends but I have my own strategy to apply on how I get in and when I get out.  I also have more than one strategy in play all the time.

1. Renko charts are a kind of indicator because they are only an organization of the price data and a visualization of the trend by absorbing noise into the basic trend display.  My profile give examples how I use them plus some secondary indicators. If you don't know what Renko charts are you can check the article on this site, search Market for examples of indicators and EAs, and use YouTube to see some trading styles and strategies.

2. I tend to use Laguerre Moving averages which are based on a more complex formula developed by John Ehlers.  I think they are more reliable trend indicators or at least more responsive. It all depends how you use them.

3. There are all sorts of other trend indicators like SAR, various bands, etc and other ways to visualize a trend like slope indicators.

The main thing is you finding indicators you understand a trust without believing in them totally.  The fact is because prices tend to regress to the mean and also spend more time ranging than trending, a one-size-fits all indicator is never very profitable in the long term after the spread is deducted.  You need something more in the way of strategy.

For me when I trade off trends I go for longer time frames, H4 or D1, and I scale into the trade with a minimum position and as the trend develops I add positions. You have to be careful since you are always raising your average cost when you do that and when the reverse comes, you lose all your profit and more if you hang on expecting the trend to continue.  If the price reverses 50% of a trend or even less, your profit is wiped out.  Take some profit along the way. Consider more than one exit strategy: take profit at the first glimmer of a reverse and get out while you are making money.  Never let a profit turn to a loss because you "hope" so much or spend too much time thinking.

Those are my "thoughts"     Good luck.

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