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Signs of Strength in a Trend
Al Brooks
Abstract: Strong trends run from one corner of the chart to the diagonally opposite corner with only small pullbacks. However, in the early stages of a trend, there are signs that indicate that the move is strong and likely to last. The more of these signs that are present, the more one should focus on with-trend entries. One should start looking at the countertrend setups only as great with-trend setups, with him entering on a stop exactly where the countertrend traders would be forced to exit with a loss. One interesting phenomenon in trend days is that on many of the days, the best reversal bars and the biggest trend bars tend to be countertrend, trapping traders into the wrong direction. Also, the lack of great with-trend signal bars makes traders question their entries, forcing them to chase the market and enter late. Finally, once someone realizes that the market is in a strong trend, one does not need a setup to enter. One can enter anytime all day long at the market if one wishes with a relatively small stop. The only purpose of a setup is to minimize the risk.