The trend scalper

Fri, 02 Jan 2015 13:22:13 +0000

Trend Signal is about true or real trends. There are two types of chart formations that look like trends. Both are trends, but only for the chartist. Beyond that they are different. One has a reason, a driving force, and the other got just created by random market forces.

If a trend has emerged just by random, chances are that it will not go ahead. A trend with an intrinsic reason will more likely advance.

Of course, there are intermediate forms of those trend extremes, but the idea is that the chart reader doesn’t get it all, contrary to what many of them are thinking.

The distinction between the two trends is often difficult to draw. Either a stock or spot market price sports a trend and we look for a reason, or some news shows up and we wait for a trend. Part of the reason for a trend may be self fulfilling prophecy. News may be interpreted distorted in the light of a current trend.

The picture is blurred and that is the nature of the market. If it were not, everybody should be able to win, and that is impossible.

The market has to be obscure. It has to send false signals. Intelligent traders who try to outsmart each other make the market to what it is, a hardly predictable beast.

Fortunately there is one great chart pattern that gives us a chance — the trend. It is probably the best chart pattern there is. Hard to fake, like breakouts, and if it leads to a new sustainable price level, then there was indeed a reason behind it.

The trend is the most basic chart formation and it can be the most reliable. Can? Can something be called reliable that only can be reliable?

Exactly that is the problem. While a trend is running, the moment right now, when you are thinking about making a trade, no one can be sure that it will go ahead. It just could.

Trend Signal’s solution to this basic trend trading problem is twofold:

  • We are looking for trends that may have a fundamental reason behind them. Stocks with a currently running trend and a driving force for that trend make it into our trading selection.
  • Members of this selection get traded by an automaton that itself tries to carve out swings in what hopefully turns out to be a longer lasting uptrend. This is the scalping part.

Current trading candidates show up in our trading blog for trend situations to which you just have to subscribe and — abracadabra — you are part of the inner circle.

What to expect from these signals?

Not too much!??

Or, in other words, these trading ideas are attempts. In most cases the market will prove our calls wrong. So, don’t be astonished when many of our trend situations go nowhere or even reverse. Monitoring these promising situations is the key to success.

We are analyzing the fundamental situation behind a technical trend and match that to our list of successful patterns. This preselection process bends the odds into the positive zone.

That is the maximum we can do and it is enough for the first phase. The market is also obscure for us. It can’t be different.

And that is why we cascade this preselection with our trading demon. Buying into a trade that is just a possibility and hang on to it is not enough. A working trend system uses stops and swings with the market instead of hoping for the eternal rise.

So, following our selection of trading candidates is one thing, but that has to be combined with a trading system. We need concrete buy and sell signals.

Instead of chart patterns we use neural trading signals for the actual trading. Trading chart patterns mostly means waiting for them. Waiting is poison for the trend trader. You miss the best situations, namely trends that go ahead after being spotted and you get stuck with the ones that decelerate or reverse.

We want to be in the market as soon as possible and we do it with a special trend trading software that uses neural AI techniques. Using a neural net algorithm for determining buy and sell points has several advantages.

Here is the biggest one. The neural algorithm of this trading machine is able to adapt itself to a specific stock in a specific situation. It is not just some hardwired and fixed indicator system. No, it is something much more complex with literally thousands of parameters. This way it detects regularities that are invisible to even good human traders.

The other great plus is that trading software is insensitive to emotions and psychology, the great enemy of every trader. If you feel unsure or frustrated about your trading system or decisions, use a mechanical system and regain your confidence. If not, you will still enjoy this relaxed type of trading. There is an additional bonus. Software really likes to work…

Neural trend signals for relaxed trading!

As a final word, the neural signal software above is not perfect. Oh no, don’t expect the impossible. But it beats most human traders and that is more than good enough for the second step in Trend Signal’s trading cascade.

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