Trend day strategy from TradingwithLeafwest

http://blog.tradingwithleafwest.com/?p=1066

Today ended up being a Trend Day … once you recognize it as being a Trend Day the trading strategy is pretty simple.

1. Short all retracement moves into the 20 ema;
2. Then expect a retest of LOD’s and probably a new low;
3. Then cover the short on a reversal signal/candle;
4. Then wait for retracement into the 20ema;
5. and then … rinse repeat.

It’s really as simple as that … place your stop above the 50ema and keep assuming that the TREND DAY will continue until it proves to you that it is not going to.

Turn off all your indicators … only two things PRICE and MOVING AVERAGES matter. Ignore MACD’s, RSI’s etc. The only indicator that serves some purpose is the TICK indicator … pay attention to this to confirm the pushes to new LOD’s. If the TICK does not make a new LOD when price does, be a little more careful on the next retracement into the 20ema. The pullback may be a little more complex (i.e., 2-legs) or it might even push through the 20ema by a little bit.

When do you know it is a potential TREND DAY? I use a pretty simple method. If after the first couple of 5-min candles, the market pushes in one direction strongly and breaks resistance prices, your antenna should be going up. After the first hour (10:30am eastern), if the market really hasn’t had any push in the opposite direction, you can start to assume it is unfolding as a TREND DAY and put on your TREND HAT. Until the 50ema is broken, keep implementing your TREND Day tactics.