Trend Trading: 3 Ways To Trade The Trend

Maybe our title should read:

Trend Trading: 3 Ways to trade the trend, which we use at Black Dog.

This title would be more precise as we very often use all three together. But before we go into details in how we set about our trend trading it may be a good idea to state the obvious in that there are many traders who trade against the trend with the result that their hit rate drops dramatically.

The Problem

We all know that a very high percentage of traders lose. That is a given.

In many cases it is because of the usual suspects, system-hopping, no patience, no discipline, jumping into trades willy-nilly, no trading plan, no trade management, the list goes on. Trading against the trend adds fuel to that fire and before too long – poof!! – another account bites the dust.

Don’t be one of them.

Add some structure to your trading. A semblance of organisation.

Break your trading down into its constituent parts and work on each one to see how you can do things better. This is all done for you at Black Dog and if you want to improve your trading it is the place to be.

In the meantime we can look at one aspect which is Trend Trading, and how Black Dog could help.

The Solution

Once you have solved how you are going to trade the trend then you will not have won the war, but you will have won a battle. Although it won’t solve your other faults at least you have tackled one problem and are ready for the next. There are many battles ahead and if you go about each one in a similar vein then things will start to look a little rosier.

Yes, there are often good trades against the trend but the odds are against you. Why fight them? Keep the odds stacked in your favour.

If the trend is up that means the majority of traders are going with the money, going with the flow. So do not fight them, go with them as it is much easier. Just go with the money every time and watch things improve. That seems like a good idea to me.

Now, it may also be a good idea to explain how I have been trading these last few months. My time is spent entirely on the Dax index trading the M5 time frame BUT in the direction of the next higher time frame which is the M15. Trend trading EVERY time. This is described in a previous post of How To Trade The Trend.

The higher time frames than M15 may even be showing a different trend, but I do not want to overdo things. M15 down to M5 – and that is it. No complications.

Maybe it’s a little overkill to trade the M5 but then want ALL time frames such as D1, H4, H1, M30, and M15 to be showing the same trend at the same time. You may only get one trade per month..!!

Trust me, this works like a charm – of course we have losers, but not as many as if we traded against the trend. Think about it.

Above all, I want to keep things very simple and, with using our methods every day, it has become second nature.

So what are the 3 ways to make sure we are trend trading?

  1. Our fantastic channel
  2. The Black Dog arrows
  3. Our trend identification tool

Let’s take them in order:

#1 The Black Dog Channel

Trend trading: 3 ways to trade the trend

The chart above shows the channel and how it defines the trend – for the time frame you are looking at.

For me, the channel is one of the best tools in the universe. It tells you the direction to trade. It tells you where the money is going. Simple.

Green channel = long trades. Red channel = short trades.

The chart above is M15, so any trend on that time frame shown by the channel allows me to pop down to the M5 and trade quite safely – looking for entries as described in the Black Dog modules. In this case it would be module number four.

You may use any pair of time frames for this little tactic. It is easy enough – define the trend on the higher time frame, then go down to your trading time frame and look for entries. You now know that you are trading with the trend. Super..!!

It gets better.

#2 The Black Dog arrows

How good would it be for you if the chart gave an alarm every time there is a change of trend?

That is precisely what Black Dog traders hear when the trend changes. They can now open their trading time frame and look for entries as per usual. Let’s take a look at another M15 chart, this time the Dax.

Trend trading: 3 ways to trade the trend

With my MT4 open I have two charts to view – Dax on M15 and Dax on M5. I have the alarms set only on the M15 so that there is no confusion of signals. For me, this is an excellent combination and, to be honest, I haven’t even looked at forex charts in a long while.

The red down signal was superb, the blue just as good giving anywhere from 50 to 150 pips..!!

Obviously we don’t get this type of trading every day – we would all be millionaires in no time. But if we set about our trend trading in the direction of the higher time frame trend, but on your normal trading time frame, this will give plenty of trades around the 10-50 pip range. Then it’s just a matter of managing those trades and keeping those losers to the small side using our Black Dog Trade Management. (Module 6).

Sound good so far?

Well, it does to me…

Can it get any better in trading with the trend?

You bet…

#3 Our Trend Identification tool

This is where it gets very interesting. By having a visual aid on the chart it makes for more confident trading.

Now, not being a Hemingway or a Shakespeare, I may struggle a little to get the message across but I think you’ll understand me. I hope.

This tool places a vertical line on the chart and from that point you can say to yourself that from this line I will only take short trades, or longs, as the case may be. I use this on the M15 time frame only but manually draw a vertical on my trading chart (M5) as described below.

The chart below is of the M15 Dax where our tool has automatically placed vertical lines for us. For me, this is Trend Trading at its best..!!

Trend trading: 3 ways to trade the trend

These vertical lines are actually produced by our indicators and makes for easier interpretation. I do not have them on my M5 trading chart, only on the M15. Of these three lines let’s take the first two as they are fairly close together and can be shown on the same M5 chart.

On the appearance of a vertical line it is a simple matter to place a corresponding line onto my M5 trading chart. I then know the direction to trade. Like so…

Trend trading: 3 ways to trade the trend

Here we have the trading chart of M5 where we can look for entries.

The first red vertical was well into the middle of the night but I would be looking for short trades if it was still in effect after the London open. The operative word is ‘after’ – because I want any news and the opening orders to be well digested before I look to enter. The blue vertical arrived at about 8:40 my time but I knew there was big news at the top of the hour, best to wait. And the rest is history.

I’d be looking for long trades only (unless there was another alarm from the M15 time frame), the channel had turned blue (long trades), and the appearance of a trend change arrow. All good to go, for long trades only.

Now we can look at the final red vertical line from the M15 chart but transposed onto my M5 time frame.

Trend trading: 3 ways to trade the trend

How good is that?

Three great methods of keeping you with the trend. We actually have a fourth, but I must keep that for our members. But just as good.

Conclusion

Every trader knows that trend trading is the most profitable way to set about your trading, but few actually do it. In fact, there are not many who can actually identify a trend, whereby their trading is more akin to gambling than trading.

There can only be one outcome if this is the case.

They may get lucky once or twice but overall the boogie-man broker will get them. The shark-infested waters of the trading world will soon have that account.

But of course, we are wiser now. We can identify the trend and trade with it. Black Dog will help you with every aspect of your trading but if you are a gambler then unfortunately there is not a lot we can do – except direct you to the nearest casino.

Remember, this is one battle that you can win. It may go some way to solving the other problems you may have, but they will need looking at in detail nonetheless.

Some traders have trouble trading with the trend, but at Black Dog – not so.

Thanks for taking the time to go through this blog post and I hope it helped in some small way.

I have placed some links below for you which will give some idea of what Black Dog is all about.

Black Dog Modules

Become an Affiliate

Trade Copier Service (Members only)

1 Comment

  • Roy Potts

    20/12/2015

    Perfect, Dave.
    Just a cracking routine. Add the patience ingredient, toss in some discipline, and ‘voila’.
    Roy P.

Leave A Response