The Trend Trader for Futures

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Fri, Mar 5 2010, 01:47 GMT
by Bob Hunt

Pattern Trapper | View company’s profile

The Trend Trader helps to identify the current trend status of your favorite ETF markets. It not only helps us to stay on the right side of market direction, but also helps us avoid those without a trend. You can even use the grid as a spread matrix too – buying strength and selling weakness.

Pivot Point analysis is merely a tool and should be used with other technical indicators. It can be used to enter a trade, or exit a trade and when combined with average true range is a powerful money management tool. Once you enter a trade, you are no longer a trader, you are a risk manager and should monitor your trades on a weekly or daily basis depending on volatility. When you enter a trade assume you are wrong and let the market prove you are right. This will diminish the hubris and arrogance that is common to many traders. Please use these Pivot Points as a guide to better trading.

As you examine the work sheet, please note where there are two arrows confirming a trend. Be it long or short, a close must occur above or below two trend arrows to confirm a strong trend.

The short term trend is a three day moving average of the Daily Pivot. The long term trend is the Weekly Pivot. So we are comparing a short term moving average with a long term simple weekly average.

Remember, the 3×1 is a moving average of the Daily Pivot. If you are daytrading and the price of your commodity or financial instrument trades through the 3×1, you may want to stop and reverse.

Rules:

Price > than 3×1 and 7×5…Buy

Price < than 3x1and 7x5... Sell

Price > above 3×1 but < 7x5...minor buy

Price < below 3x1 but > 7×5…minor sell.

If you choose to ignore these guidelines, you will be a counter trend trader. There is usually more risk associated with trading against the trend.

You can use the grid as a spread matrix too – buying strength and selling weakness.

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Published on Fri, Mar 5 2010, 01:54 GMT