Does everyone catch the trend?
Some exchange players do not need a powerful trend and its correct identification. For example, followers of martingale. It is not important for these traders where the market will go, it is important that it goes with kickbacks. But even with a strong market movement in one direction, they can go broke.
A trend can travel the same distance both up and down at the same time.
This is exactly what the Black Scholes formula says. Although this theory has many critics. They argue that the longer the chart goes in one direction, the higher the likelihood that it will go in the opposite direction. However, long-term unidirectional trends sometimes enter into a stupor both supporters of this theory and its opponents.
How not to get caught in a bull or bear trap?
You can go into the market, which is going up, but soon see how the trend “breaks” and goes the other way. We must not forget that in Forex trends change their direction most often, and in the stock market – least of all. If you work in the smallest lots, build shopping chains, while placing stop orders, then you will most likely cope with any market. Even if the market turns around, you can turn around with it. But for this, you need to choose long-term directional trends, preferably at the time of their inception.
Trend Identification and Market Advantage
Recognizing the direction of the trend is not everything. You need to take advantage over the market. Meanwhile, a correctly identified trend already gives some advantage over the market. But it will be even greater if you start to “pyramid” the market. A lot of exchange players said that they found an advantage with the help of some indicators, which could also be. For 14 years of trading, I have not found anything better than pyramiding and the correct identification of the trend.
How much can you earn on one trend?
Any trend cannot last forever. A chart can move in one direction for a long time, a very long time – 10 years, sometimes more, but it cannot last forever. If you saddled a trend, then do not forget that you need to scalp profits from time to time. Otherwise, you will collect water with a sieve, and this is a very useless task. Will the trend still go in the same direction? Great, but this is not a reason not to leave the market, for example, when doubling or tripling capital.