Trend trading: 3 ways to trade the trend

The Best Way to Trade

That may be a bold headline and possibly difficult to back up with cold hard facts, but week after week we at Black Dog, and especially in our Trading Room, enjoy some great profits trading our methods and have possibly found the best way to trade.

Later in this post I’ll show the trades from last Friday.

This post describes, in a roundabout manner, what I think is the best way to trade.

It took me a very long time to arrive at this conclusion because I always thought that I knew better, knew better than all those professional traders who spend all their time trading, who spend their time with large accounts, and who are not particularly bothered about the rest of us as long as they can trade in their own set-in-stone ways and usually for massive profits.

Why not try to emulate them? In one or two ways at least.

So I did. I also understand that we, as non-professionals, need a little more to help us with our trading and that is to be expected… but we can do our utmost to get ahead in this great game.

Quick Update

The Best Way to TradeBut before we go there, it’s high time we had an update on how trading has been going of late especially now the festive season is behind us.

I hope that you all had a very merry Christmas and I wish you all the very best for the upcoming year, and beyond.

Let’s prosper with our trading.

To be brief, the last few months of trading have been pretty good to say the least. Let me explain: 

How it used to be…

When I think back to when I used to trade the majors of forex, all twelve pairs and maybe one or two others plus an occasional trade on Gold, Oil, S+P, Russell, NAS, etc., I was jumping all over the place and, as expected, I didn’t do very well at all.

I’m going back a long way here but the lessons are there, to be learned, I learned them well. The profusion of signals, analyzing here and analyzing there, news announcements, correlations and contra-correlations. Jeez, it’s a wonder I kept my sanity.

Finding the best way to trade seemed to be light years away.

Confusion reigned supreme. 

Quite a few of the pairs, and the other instruments too, moved in tandem i.e., correlated, so why trade them all? Usually one of them would have a great move but the other would move not so much. I had the uncanny knack of trading the one that faltered..!!The Best Way to Trade

It was obviously time to re-assess. I reduced the pairs to four only plus the Dow and the Dax indices.

Things started improving almost immediately. My trading was much better for a few months but still not as good as I would have liked.

Confusion reigned.

Next it was down to two pairs plus Dax and Dow. This was much better. I was finding that I was spending more and more time with the two indexes and only occasionally trading the two pairs. Plus, it was the two pairs where I was making most of the losses.

Yes, I was still having problems with all the signals that our methods generated as I skipped from chart to chart. Remember I traded the pairs on M15 and the indices on M5. The signals were usually ok, just too many of them.

Confusion.

A few months ago I started to think that it could yet be much better. That maybe I should specialise. Dax now became my weapon of choice. Dax only. Only the one instrument to study and trade.

I have never looked back and have enjoyed the best several months of trading. Quite a few members in our Trading Room would agree with this. The result…

No confusion.

The Best Way to TradeWhy, oh why, didn’t I do this much earlier?

Thinking about it I suppose it’s the thought of missing out on a good move no matter where it was and which instrument it was, I was just afraid of missing out.

I had heard that the top traders usually stay with the one, so I thought that I would do the same.

The results have been very good to say the least and I highly recommend it. Less stress, no confusing signals, there is a trade or there isn’t. Period.

No more switching from chart to chart looking for trades that are not there. Granted, the Black Dog did get me trading in the correct direction but it was invariably the wrong pair that I traded.

Had I found the best way to trade? Getting close, that is for sure.

Although I wasn’t losing, I wasn’t winning a great deal either. My account graph could have been much better where instead of heading in a generally easterly direction, I wanted it more northerly. Northeast would be fine.

So, I can report that, personally, I simply trade the Dax index for maybe 99% of the time with an occasional foray onto the Dow index.

Forex pairs have been left well and truly behind.

After months of Dax trading I now find forex to be fairly tame and often hardly moving at all. The daily ranges must be well down, though I haven’t looked for evidence to prove this.

Watching forex pairs that take hours to move twenty pips seems to add credence to that. I would be pulling my hair out..!!

So that would suggest that the Dax can move very quickly?The Best Way to Trade

I’ll say.

It does have its quiet moments though as can be expected but our indicators keep us alive to the fact.

On a good day I’m often in and out of trades within three candles or so with between 20 to 50 pips in the bag. Often more, and this is on the M5 time frame and trading as described in the previous post Trend Trading.

This also means that trades can go against you pretty quickly too and if you happen to suffer a string of losing trades then the negative pip count can soon mount up.

Of course, using the information in the Trading with the Trend post, and coupled with our fine indicators, we find that we are trading in the correct direction more often than not.

The idea is to win more than you lose plus keeping any losses to the small side. “Easier said than done”, I hear you say. Well, how to achieve this is fully explained in the modules of our superb program.

Win more than you lose – AND keep winners larger than losers. This is a good recipe for a healthy account.The Best Way to Trade

What you will need is the discipline, the patience, and an excellent method of trading. We can provide the method; the first two are down to you!

So, specialising in just the one instrument has solved it for me plus a few others in our Room. I now have a feel for the Dax and can often predict its movements fairly accurately. I have finally found the best way to trade that suits me down to the ground. This has paid off handsomely.

I just hope that it will give you some food for thought.

Targets and DAT’s

Last Friday turned out to be an excellent trading day.

Not all days are like this I hasten to add, and I still miss trades due to distractions (her indoors, usually). Which brings me to another subject dear to my heart. One that can be costly and I was forever hearing it from newbie traders on forums.

Namely, targets.

“How many pips can I make daily with this strategy?”

Who the hell knows?

The Best Way to TradePersonally, I don’t like the idea of having targets, especially daily targets.

They can often get you into what we call at Black Dog ‘DATs’ or Dumb-Ass-Trades.

Late in the day and you are short of your target, what do you do?

This is when the DAT will manifest itself and you start to give back what you have made. Or worse still, add to your losses. Trying to achieve a daily target by taking trades that you shouldn’t is a wealth warning.

The other side of the coin is just as bad.

What happens when you achieve your daily target in the first 15 minutes of trading? Do you stop for the day when the market is having a beautiful trading day and miss out on a multitude of pips when the market was flat yesterday?

The idea is to take what the market throws at you every day be it 1 pip or 100. Tomorrow may be a losing day.

I do actually have a target and that is not to lose. Considering that most traders lose then if I finish the trading day with just the one pip to show for my efforts then I am happy. Not ecstatic. But happy.

I prefer to tot up at the end of the week, but again, I just want to be NOT in negative territory. That is my target.

Back to last Friday…

The Best Way To Trade

Black Dog Trades 08.01.16

The M5 chart below shows the trades that I took on that particular day. As an aside, I post every trade I take in our Trading Room with explanations.

You can also see that there were two or three trades that I missed, for one reason or another.

If I had been fully committed to the charts for the full day (a tough task, I know) then the pip count could easily have been another 200 pips on top of the 111 that I made. 100-pip days are fairly common where our Trade Management techniques keep any losses to the small side. Usually below 10. 

With the info from the blog post Trading with the Trend and taking my trading as specializing in just one instrument, I find that I have found the best way to trade.

[For a clearer view please right click and Open Image in a New Tab]

The Best Way to Trade

From a previous post you may agree with me that our channel, if used correctly, is the best indicator in the universe – bar none. See how the channel keeps us trading with the trend for the time frame in front of us. It really is that powerful and unbeatable.

I actually started writing this post the day after, but a week has rapidly gone by where this Friday produced yet another 100+ day where I will do another blog post. The intervening days were pretty good too and I expect great things for the future simply by following the words in this post. Please join us.

If you trade the lower time frames then you really do need to specialize and trade one only.

This, for me, is the best way to trade. That would be my advice.

Many thanks for reading.

1 Comment

  • Joachim Braun

    17/01/2016

    Hi to All

    Thank you for this post! I am one of the newbies here at Blackdog and I totally agree to what you are writing, Dave. I can say, that I start falling in love with my dog setup. Before, I jumped from one system to another mostly loosing, trading a lot of forex pairs at the same time. Very often, I missed signals and setups while watching the other charts and anyway, my trading was always very stressfully.. I also started now trading only trading the dax. And what happened? All the stress is gone, I have time now to watch my chart- only one chart!
    The last weeks, I don’t have so much time for trading, for sitting for hours in front of my monitor, but I don’t mind anymore. I know, my dax will move during the whole day. Ok, sometimes less, but moves will follow. Even at 5 pm last week I made some nice trades. Mostly I close my positions too early but nearly every trade between +2 and+10 Pips..

    I am sure that patience and time will bring more success.

    Another super thing is, I am not longer the lonly wolf (trader), I now have found some trading friends I can talk to in our chat.

    And at least, yes, I still have a day target, +10 Pips, but when I think about that now. When I didnot get my 10 Pips I took another trade and very often I loose than. And yes, very often when I win in the beginning of my trading session its very hard for me to stop …

    So, thank you very much to all the traders here, thank you for careing about the newbies, I think there will come a lot of good tradingdays for us in the future.

    Joabra (Joachim)

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