is not a real trend, but immediate price action, tempting traders to initiate
trades and experience a costly and painful exercise. To avoid falling into this
trap, you need to focus on longer trends. This is what a real trend looks like:
The price is consistently rising with no sudden changes or explosive
movements. You can expect that this trend will continue and you should take
only bullish signals. Obviously the trend won't last forever and you can even
have bad luck by entering the market at the end of the trend, but the odds
work for you. It simply cannot be better. There are 100s of free or proprietary
indicators to identify the trend but believe or not, no indicator is better than the
human eye. As Albert Einstein said:
“Make things as simple as possible, but not simpler. ”
Now let's reveal the easy but the most effective method to identify the trend.
1. Zoom the chart in/out to show about 200 bars. Notice that 200 bars on
daily chart (or 200 trading days) correspond to 1 year.
2. Connect the lower left corner with the upper right corner. If the line
overlaps with the price bars several times (the more times, the better),
you have found a reliable uptrend. See the example below.
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