After waking up this morning, my mind must have done some more thinking while asleep. So here's a follow-up to the prior post on trading with the trend. Even though I'm generally scalping for +2.00 ES points right now, there is value in knowing the direction of the trend.
On my prior post, take a look at the swings when the trend is up (right after the 1-2-3 bottom). The swing legs going up are bigger than the swing legs down. It's one of those "no duhhhh" statements that can get lost in the heat of the battle, or especially if you think you're "right" that the trend will change. So if the trend is up, it's usually much easier to make money on the long side. Once again, "no duhhhh!"
Here are some additional takeaway thoughts:
- Timeframe
- Evaluate trend using 5 min chart, which is a good timeframe for my current scalping strategy. However, any timeframe may be used based on your trading style.
- Trend up
- Long trades - take as normal, and potentially add a runner/kicker in the future to scale out.
- Short trades - take the fade trade, especially if the levels are strong. But be more careful, potentially exit quicker, and/or possibly go smaller profit targets if the levels are not strong.
- Trend down
- Long trades - take the fade trade, especially if the levels are strong. But be more careful, potentially exit quicker, and/or possibly go smaller profit targets if the levels are not strong.
- Short trades - take as normal, and potentially add a runner/kicker in the future to scale out.
- Potential trend change
- Take trade as normal, range based markets work well for scalping. But realize it might take longer based on the market conditions at the time.
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