The first point to understand is that there is no such thing as a trend by reference to a single moment in time or a single observation of any market. Although traders will comment on a current trend, the concept can only have meaning if you relate the market price at some point in time with the price at some previous time. So we need at least 2 observations. In fact, we will need to include on our analysis many more than 2 observations since a market cannot be said to be trending in a meaningful sense if the total movement, or even most of the movement, that has happened in a single instant, such as a gap up.  If we take it that the first observation relates to the current time then, by definition, we are basing our analysis on past movements in the market. Consequently, a trend following trading system relies on an acceptance that what has been happening will continue to happen. This is not always going to be the case, so we need a methodology with the ability to assess the possibility that the trend might reverse.

A second important point is that we need to decide in advance the time period that we are considering for our trades. Choose any financial market. It will be always in a trend in some time period. But this might not be a tradable trend or it might not coincide with, or be compatible with, our trading style. As an example, if we observe an upward movement on a five minute chart, this is not useful for a trading objective that aims to hold trades for a month. Similarly, a trend that is identified on a daily chart only will not be reliable as a basis for intraday trading. This concept is also an important input when determining how we manage a trade and how to define and execute the exit strategy.

The result of these observations is that we need to ensure that we know how we are going to define accurately what we mean by a trend, we need to be sure that we have a methodology that can be applied consistently so that we always know if a market is trending, and we must be sure that the setups we intend to use to enter and manage trades are appropriate given our methodology. It is important to emphasise this distinction between identifying a trend and finding a tradable trend, and applying this in our trading analysis. These are essential elements of a trend following system.

The trend following strategy that is used by Spread Select. This system employs 5 predefined templates to identify if there is a trend in a market. The market is assessed on a numerical scale according to a predefined set of rules related to each template. This ensures consistency since a trend is only identified if the aggregate is sufficiently large. The system then moves on to identifying if the trend can be traded according to the rules of predefined setups. As a result, there is compatibility between the trend that exists and the trading style that is used. Key elements of this process include ensuring that the trend is not overly extended. A separate analysis is then used to ensure that the trend observed is confirmed. Only if the market passes each stage of the process will additional analysis be undertaken to time the trade. Furthermore since the setup rules not only identify the entry conditions but also define how risk will be managed and the conditions for exiting the trade, we can be sure that our analysis remains consistent.

It should be clear from this brief discussion that a trend following system requires more than just observing that a market has moved in a particular direction. If this was all that was required then every market would have a tradable trend all the time. A good system needs to tell you when a market might be traded and when it is better to stand back. The Spread Select model does this and by doing so it can tilt the probabilities of success in your favour.

Many ordinary people regularly trade financial markets that only a few years ago were the preserve of highly paid professionals.  However, just because it’s easier to trade than ever before it does not mean that it’s easier to trade profitably.  Some are very successful, but most are not and give up in less than 6 months?

Why?  Are there some secrets that the professionals still hold back?  Is it only highly educated people that are successful?  Is it only the already rich that can be successful?  The answer to all these questions is no.  The real reason is that you can only be successful if you approach the markets with a proven strategy that you follow.  The old saying is so true … plan your trades and trade your plan.

Fine – but where do you start.  You will be successful if you trade with a proven strategy … but it seems you can only develop such a strategy by trading successfully.  This is the vicious circle that traps most new traders with the result that the market quickly forces them out … having first taken their money.

The goal of Spread Select is to enable you to trade the financial markets profitably.  It’s easy to get started, and while trading profitably is neither simple nor easy to master, the concepts you need to master are surprisingly straightforward.  The aim must always be to tilt the probabilities of success – there are no certainties – in your favour through following a coherent plan.

This is best done by trading with the trend.  If a market is in a trend then it continues to move in that direction unless it reverses.  And it only reverses once for the trend to be over.  So most of the time the trend is going to continue.  This is what gives an edge and puts the probabilities in your favour.  Then, identify the times when the market is most likely to reverse and don’t trade.  Otherwise, trade in the direction of the trend.

This is the basis of the Spread Select approach.  We filter the range of Forex markets to identify those with a definite trend.  We then analyse this group of markets to see which have the strongest trends and which are showing signs of tiring.  We then identify and note in advance the price movement that would confirm our analysis and trigger entry into a trade.  You can see a sample of this analysis as provided to our members by clicking here.  

Kevin Hannigan is Market Strategist with Spread Select

Currency trading is a internet business. You need to treat it just like one. You can make great profits however it’s not necessarily all clear sailing. You may have losing portions of the day to endure. And this is what can determine whether you’ll be in the game for the long run or out on the very first losing period.

My business is mortified whenever suppliers convey to people they can quickly make 30%  every month. Yes you might be able to get it done the unusual month but EVERY technique will have losing months. That I can guarantee and if you are doing 30%  on your perfect months then the only way you are doing this is to take massive wagers. You are utilizing leveraging way in excess of that you can withstand.  Forex Trading

My spouse and i often inform people ask your-self this. What do you want to generate every month? Let us say they assert 20%. (cough, cough) I say ok. Therefore you lose 20% in one calendar month you are okay with this? They usually squirm a lttle bit and say alright. So I then ask if you have about three successive losing month at 20% you’re comfortable with this? That signifies losing 60% of one’s accounts in order to chase these massive 20% per month advances. Think you’re at ease with this?

At this point the gambler may say Sure. I’ll take a risk. That is the reason why they’re gamblers. It is similar to running red lights. You could get away with it for a while till wham.

Therefore before you get all excited about payout ask you-self what you will be prepared to lose so that you can run after those results?

That’s why I will be proud of 3-8% monthly results. I don’t want to shed in excess of 20% of my personal accounts and I realize I could produce a fantastic living with such results. So can you if you take care of it like the business it truly is. trading System

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