Taking above chart as a good example to illustrate how to ride a trend until its bend.
Above is a perfect chart for this strategy, although most of the time, we may not be able to pick such trending stock, nevertheless, we are not trying to spot home run stock which nobody can predict the future trend.
The logic behind this strategy is to divide the trading capital into 5 equal parts. Each entry will use 1/5 of the total trading capital. The reason is simple, if my initial entry is wrong, I can exit with small losses instead of putting the full capital sum into initial trade.. Frankly speaking, how many times will the share price pulls back after we execute the buy order in the market? I believe many of us have such a feeling of been lousy. But if you are confident with your analysis and understanding of the market mechanism, you know that the share price will head higher or lower after a few sessions.
Assuming after the initial purchase at no.1 location, and price starts to move higher to no.2 location and gain support from the blue dotted line, this is the time where we start to make the 2nd purchase and let the trend does what it best doing.
Subsequently at location 3 and 4, purchases are made with the support of the blue dotted line.
As price move higher and faces resistance from sellers, it starts to bend and break down the dotted blue line with Red price bar, this is the time to call it quit and exit from the market immediately the next day.
Throughout the trend trading from location no.1 to 4, the price bar never changes to RED, meaning the price trend is still in-tact, no need to think of selling and only think harder for the next accumulation location.
The above strategy is good for people who has a full-time job and do not need to trade often in the market. The effort required is the 1 hour everyday after work to look at the price chart and ask the following questions.
1) Has the price bar turned RED?
2) Has the price gone below the dotted blue support line?
3) Any of the weakness indicator triggered recently? e.g. lack of demand, trap upmove, professional distribution, top reverse, end of upmarket etcs..
Continue to hold as long as the price can trend..
Patience and perseverance.. Win the trading game in 2018
