In an ideal world the market moves nice and smooth.
It sets off strong in one direction (up or down, we’re not fussy) and we wait for a pause. We look for a little pullback. And then we enter the trade.
This is the Continuation signal we’ve been examining recently.
It’s the ‘bread and butter’ swing trader’s trade.
It’s pretty simple to spot an ideal Continuation move in hindsight. They stick out on the chart. And if you know what you’re doing you can trade every single one of them in real-time.
The thing is the markets do trend, but they spend most of the time locked in consolidation phases. Or what you might call trading ‘ranges.’
In those situations the entries for your Continuation trades can be few and far between. It can be weeks, or even months, before you get a good breakout and the eventual pullback that lets you enter.
Some traders are fine with this. And patience is such a valuable trait when it comes to trading the markets.
But some do like a bit more action.
So what can you do when things are choppier?
How might you look to enter trades early – before the trend has even got going?
WITHOUT risky ‘itchy trigger finger’ trades!
That’s where the ‘Change of Trend’ signal comes in.
It’s a bit more aggressive than the Continuation signal. And if you think about it the market hasn’t got the ‘rolling weight’ of a trend in motion behind it yet. So there can still be a fight between the buyers and the sellers to keep things inside the range.
But if you keep your risk small you can capture some incredible trades.
(The secret is being quick to dip in and out in event of a ‘stuttering start’ to the move.)
You can be in your trade hundreds of pips before the first Continuation signal even shows up on the chart. And nothing beats the feeling of getting in weeks ahead of other traders.
In fact, you can take your first profits by selling some of your position to those only just getting in!
So we’ll take a good close look at the Change of Trend signal. I’ll do some more short videos for us.
In the meantime, if you want to see exactly how to trade the Change of Trend, check out p45 of Marc Rivalland’s Swing Trading book.
Here’s where to grab a copy: [LINK]