What's the best trend indicator to use ?
Everyone wants to find trends. Buy in an uptrend and you'll make money. Sell in a downtrend and you'll make money. How to get out of a trade and take profit ? Try to identify when the trend has changed direction.
So how do you do it then ? There are multiple indicators and signals you can use to show trend strength and direction. The best one however is the Mark 1 Human Eyeball. I can't claim credit for this, a much better trader than me came up with this indicator -
- Use a small child (preferably one with eyes)
Children are cheap labour. They can bribed easily with sweets and toys. Yeah, I know that sounds kinda sinister these days, especially if it's the neighbours children, but just imagine we're living back in simpler times where 95% of the population weren't paedophiles (thanks MSM for ruining adult child relationships forever, just to sell newspapers).
Put your chart on the screen, no indicators, just bars or candles or even just a single line price. Ask the child -
- Is the line generally going up ?
- Is the line generally going down ?
- Is the line just sort of wiggling up and down ?
9/10 the child will be able to tell you what the trend is. The 1/10 should probably be checked by a licensed practitioner.
That's all you need, no fancy charts, no fancy indicators, just use a small child and if one isn't available, just use your frikken eyes !
So your looking at this chart and can't decide what to do. You know it makes sense to always go with the trend, as it increases the probability of a win.
Hard to tell really... So just zoom out a bit. How about now ? Would you be selling shorts in this market ? Of course not.
Now, that's not to say the market is going to continue in the same direction forever. Obviously it'll change at some point in the future and probably come back down. The peak may have already been reached. But until it's absolutely obvious it has, as verified by a small child, then just continue to believe the trend is intact and only take trades in the direction of the trend.
If you can't tell what the trend is, don't trade that market. There are thousands of markets, don't feel you need to trade one in particular, just because it's your favourite. Put the odds in your favour and if you can't tell, it's usually a sign that you shouldn't trade. There's no dishonour in not losing money, it kinda helps to make money in the long run...
You don't need fancy indicators to tell you what the trend is, just look at the chart.
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