Is there a benefit to grabbing a trend reversal?Ĭan you pick tops and bottoms consistently? Leaving aside higher frequency trading algorithms that will quickly jump from long to short and back again, at home traders will find going with the trend, an easier road.
Traders looking for bigger returns know that the path of least resistance is in the direction of the big money. If I am trading a 5 minute chart of sugar, it is pretty clear I’d want to be looking for a sell signal and not be a buyer.īe very clear in your trading style and consider using trend indicators on your trading time frame OR trade in the direction of the time frame a few levels up. Let’s contrast that with a day trading chart. Price is obviously going up and short trades would be painful. If I was trading sugar futures on the daily chart, I’d want to be looking for a buy signal after the momentum thrust and gap price move off the bottom. Is swing trading your strategy with 4 hour and daily charts? New investors may want to start with cheaper stocks so they can build a more diverse portfolio.īefore you focus on which trading indicator to use for trend direction, choose your time frame.ĭifferent Time Frame = Different Trend DirectionĪs mentioned, before you even consider trend direction, please consider the time frame you will trade with your trading strategy.Īre you day trading using 15 minute charts or lower? Every investor has their own unique preferences. With that question, you are realizing that the direction of the trend on a daily chart, for example, can be the complete opposite as the one on an hourly chart. The first question you should ask is “what time frame are you talking about?” What trend indicator should you use to show the trend direction if you want to trade with the flow of price?