Trend Trading Set-Ups: Entering and Exiting Trends for Maximum Profit

PART I

Trading success is heavily dependent upon being on the right side of the trade and executing the trade at a reasonably optimal time. Neither concept is new. Both are much more difficult to do than they seem.

Take a moment to consider the implications of these two thoughts. What does it mean to be on the right side of a trade? For a technical trader, this almost always means that you are trading with the trend, but even that statement is somewhat ambiguous since it implies that the definition of a trend is known and that there is only one trend. Unless you read my first book, Trend Qualification and Trading,1 you are probably unaware that not all trends are created equal and you are unlikely to have a keen appreciation for the fact that there are necessarily multiple trends spread across many time frames that exist simultaneously. What is more, trends across multiple time frames are not necessarily the same. In fact, they differ more often than not. As you can see, once you dig into the concepts a bit, the mental clarity of the high level thoughts quickly becomes murky.

For this reason, before jumping headfirst into a detailed consideration of how to find the highest probability trades, a preliminary discussion of some basic concepts is necessary. Hopefully this will simply be a refresher. Without a common and somewhat precise understanding of the terminology used throughout this book, much of the value will fall upon deaf ears. For that reason, Part I tackles the thorny ...