Trend trading, entering positions, trading for a living, the HT way

We trade in the direction of the overall market, believing that a trader has better odds trading with the current sentiment in the market, rather than attempting to pick reversal points. When trading with the trend, the amount of heat taken during a position is much less than a counter trend trading philosophy. There are chop zones at the bottom and top of each trend, so the capitalization zone is the middle region of the trend. For example, in a 20 point move in the /NQ, there is approximately 4 points of chop at the bottom of the trend and 4 points of chop at the top of the trend; so the clean profit zone is approximately 12 points.

We first analyze the "bigger picture" charts, and establish the direction on these charts.

We then establish "points of interest".

For example, regarding today 3/28/11, we had a short signal around 9:35 am with a confirmation of the overall downtrend at 12 noon on our "big picture" chart.



On our 1 min chart, we see that we got the short signal earlier, around 8 am. This direction held for the remainder of the trading day. Based on our system, a trader is only allowed to take short trades during these types of conditions.



Next, we monitor the 100 volume entry signal chart for high probability opportunities. As you can see, this chart gives us both long and short signals. Our system makes us disregard / not enter the long signals because of the "bigger picture" conditions. We should only take the short signals.



Before we enter a position on our entry chart, we answer the following questions:

• What is the 5 min 50/200 day cross direction and 200 day slope?


• What is the 1 min 50/200 day cross direction?


• Is the 1 min cross a “blip”, with a re-cross in the dominant direction / breakout of short-term trend highly probable, or is it a strong direction change accompanied by fundamentals, 5 min chart, and other charts?


• Where / at what price are the donchian channel lines? Was the opposite channel line touched yet? If it was, consider a possible new trend formation is other charts indicate so with lower lows, lower highs, etc


• Are you taking the signal on the 100 volume and 1 second charts that are in the bigger picture direction and disregarding the counter bigger picture signals?


• Are you taking the signal at a “point of interest- 5 min, 1 min e.g.” or being impatient and entering on a weak signal?

If our answers agree with the potential trade, we initiate the position.

HT