TRADING: WHERE DO I START? 2/19/13

The question appears in various financial oriented sites.  New traders, or those wanting to learn, need a place to start.  Tonight we look at one of the easier trading methods to learn, and practice for consistent profitability.  The TREND TRADE.

The TREND TRADE is the first trade a beginner should attempt.  It will require that you analyze the market to determine a trend bias, then determine potential entries and exits.  With practice, trend trading is likely to keep you stops safe and allow you to convert your trade to profit.

Learning to trend trade has another benefit. Perfecting your trend trading will be a boost to range trading.   A range bound day is composed of micro trends that run 2 to 5 points and reverse for 2 to 5 points.  Maybe not perfect runs,  but certainly a range that has playable features. 

Getting Started:

1. Determine the trend and play with trend only.  Do not try counter trend trades. and stay away from range bound price action.
2.  Determine the Trend Line.  New entries (or your first) will be at the TL that is supporting price.  Look at the 20 EMA for support as well.  Keep your charts simple.
3.  Set your target and exit.  If price continues, and it should your not trying to capture highs and lows, after your exit beginning planning your next trade.  Where is the TL and EMA?  a pullback to support can be your next entry.  Stay with the trend.
4.  Continue to play the trend until your TL is broken or the EMA if playing it as your support.
5.  For bear trading, the TL and EMA will be resistance for short consideration.

Practice the trend trade until it becomes a habit; a profitable habit.  Only then will you begin to add more tools to your trading style.


TODAY:

You have support at the open and a break out of the consolidation

READ:  trend bias is bullish from the Euro Zone.  There is a consolidation prior to the US open.  The TL's are holding as is the EMA.  Play the touches for your target and use a protective stop below the support.  If you missed the open, look at the opportunity around bar 20 (11 am est). 
Continue playing the support with trend into the close.

Learn the basics.  Practice for mastery.  Play real for  the emotional aspects of trading.

You may not move beyond the trend trade.  When your ready, add a new method and develop it with the same discipline used with the TREND TRADE.