A good trend is loved by traders . One is wanted by everyone , one of their own , and this is understandable, since a great deal of money can be harvested in a good trend .

Wondering how to trade in a trend ? Well, there are a number of tactics that one can use . Older traders sometimes say trends are pretty easy because any plan is workable. Since prices are going in just one direction , even if you have a poor trade position when you enter , this won’t matter, since the trend will bail you out in the end . This maxim has a bit of truth , but many refinements can be brought into trend trading.

When it comes to market analysts, one thing they learn is that technical analysis explained how trends can early on be recognized, and the trend as defined by Drummond Geometry , based on the Pldot and close relationship , lets us do that . You’ll probably remember that the definition is three closes on one side of the Pldot is the definition of a trend . After the third close you are in a trend .

This happens to be significant because the best, the strongest, and the richest part of a trend is often in the beginning , when it all starts. Then, once you recognize a trend the thing is to hang with it as long as it exists . If you are permitted by your trading situation, you will want to add pyramiding, so your profit grows faster as the trend continues to develop .

Surely getting aboard a trend and hanging on tight is one of trading’s best ways to make some money . If nothing else has been learned , you should have knowedge that your style of technical analysis explained trend formation is a fundamental building block of a system for trading .

All well and good, you say , but how is entry to a trend timed ? And how do you manage a trade in a trending market ?

Trends are all different , some are slow and some are fast and others are old and some are young .

A fresh new trend is what we’ll look at first. The market has been in congestion for some time , if you’re a swing trader perhaps for days, or for day traders for quite a few hours. The congestion and its parameters are very clear. Then conditions suddenly change , often being news driven. The market starts to move rapidly on one direction .

This is when you act fast. Get in the trends direction as fast as possible and then hang on . The exact point of entry is less critical than you getting in it . This move will last for days or hours so it’s better to get in as soon as possible ! As it breaks the parameters of congestion you can buy into this trend or as the bar goes back up to the trading band top. If the trend is real and has new energy to it, you won’t see any retracements deeper than that for quite a while !

Compare this to a trend that is mature . Can you still get in ? Sure it is , but if the energy of the trend is mature and losing punch, you need to be more careful with the techniques for entry. In this case you need to look for a trend pause , at the very least a retracement of the price to the midline. Look at the higher time period to ensure you have enough potential left, enough to make it worth getting involved .

If you’re not sure about the guidelines some time spent examining a chart will provide you with more understanding. And most traders can benefit from a detailed look at technical analysis explained in a good training course , as entry and exit skills are honed .

Next time we’ll talk about entering and exiting congestions .

Here’s a look at the Technical Analysis Explained series where a type of trading, congestion entrance is explained.

Movements in the market occur from trend to congestion and back again, in a continuous cycle,repeating itself again and again and again forever . As long as the markets have been around, this has occurred and as long as there are markets, it will continue to happen. The only times this cycle isn’t seen are in times where there is artificial constraint, regulation, or intervention, such as market suspensions, price-fixing, price limits, market regulation and the like – and this only causes a temporary disruption .  But as long as supply and demand can vary , and as long as human beings come together in trade and act on their differing perceptions of value and opportunity , markets will engage in trends and congestions .

Various names can be used for this. Sometimes we have talked about equilibrium and disequilibrium , some speak of vertical moves and horizontal moves describing the way the chart moves across the page , some speak of distribution as a movement upwards and development is referred to as the movement sideways. But it is all the same .

A trend is a movement that can take you in a particular direction ; congestions are market periods where the market oscillates between support and resistance and it’s movement is horizontal .

Earlier we’ve seen in the Technical Analysis Explained series that a trend has a clear definition – it includes on one side of the Pldot, three bars that show up consecutively. Because a trend and congestion are opposites, the definition of congestions should also be simple , and it is . Congestion occurs in the market when it does not close on one side of the PLdot for three consecutive periods . How could this be anything else? We say the market is either in a trend or not , we’re already aware of what a trend happens to be, so everything else is a congestion . The market is either in trend or congestion .

Now we break our discussion of congestion into three separate lessons , as we look at the three congestion types – congestion exit, entrance, and action . As a little overview, here’s a look at their definitions.

Congestion entrance trading happens after the market is in a trend, where there are three or more closes on a side of the Pldot , and then the next close occurs on the other side of the Pldot . This particular bar, closing on a different side of the Pldot than the other previous three, is the first bar of a congestion , and the first bar after a trend .

Congestion action trading occurs as the market swings back and forth , and closes on one side or another of the Pldot as it goes along bar by bar. We will talk about this in detail in the next article in our Technical Analysis Explained series.

Congestion exit trading occurs when the market leaves congestion and is about to start a new trend . That makes sense, does it not? And so if the market violates one of the confines of congestion , by the dotted line or even the block level, then the market is manifesting congestion exit trading . Of course, there’s a lot to be said about it , and it’s an interesting topic too. However, this will be addressed later and so we will not deal with it more here . Keep an eye open for articles on the topic later.