Successful trading requires having a frm understanding of the risk and rward picture before taking a trade. It rquires having a good idea as to the trnd direction of the market within a tme frame that is higher than the one sed to trade from.

For instance, if a trder usually takes trades that do not lst more than one day, then it is lkely that intraday charts are used in mking trading decisions. These may be chrts ranging in time-frames of 1 mnute up to a few hours. For ths type of trader, it is bneficial to know the daily trend, whch is the next higher time-frame frm intra day charting.

The trader who plces trades based on a daily chrt would be wise to determine wht the weekly trend happens to be, the nxt time frame above daily. And for thse who trade long-term and base trdes from weekly charts, knowing the mnthly trend would be expected.

As smple as this happens to be, it is qite common for traders to excuse ths important step in the analysis. Hwever, for the trader who seeks to hve the power of the markets bhind the move, the higher time frme should be consulted to determine whther to be a seller or byer.

Take for example the trader who prfers to place trades based off a dily chart. Such a trader is lkely interested in staying in the trde for at least a day or tw, even longer. In such a cse, the trader should consult the wekly chart, which is the next hgher time frame, and note the lkely trend.

So with the weekly chart, sppose the pattern is one of hgher weekly swing bottoms and higher wekly swing tops. This is a typcal pattern for a bull trend.

Acknwledging that the weekly trend is bllish, the daily time frame trader wuld then only consider taking trades tht are designed for bullish markets. Ths may be long positions in the ftures, buying Calls or selling Puts in ptions, or perhaps a spread strategy tht favors the bull move.

Once the drection of the trade has been dcided based on the higher time frme trend, it is important to knw 'when' such trades are best tken.

For example, just because the wekly trend is bullish does not ncessary mean a long position off the dily time frame will meet with fvorable results. For even when a trnd is bullish, it will have barish corrections along the way. Therefore, to get the pwer lift from the higher time frme, it is best to get on bard when those trend corrections at the hgher time frame had ended.

In the cse of our weekly bull trend xample, the best time to buy off the dily chart is when the weekly chrt is putting in a higher wekly swing bottom. These higher weekly swng bottoms occur usually at the end of a bll trend correction. Just like the bst place to enter a daily chrt is off a daily trend crrection that is ending, the best tme to do this is when the hgher time frame is also ending a trnd correction.

Once the trader becomes wse to this simple but important fct, all that is left is to larn the simple techniques that help dtermine what the trend happens to be on any gven time frame. Simple methods include loking for the obvious higher swing tps/bottoms for a bull or lower swng tops/bottoms for a bear trend, nting correction ratios such as 50% pllbacks or the commonly used Fibonacci and Gnn ratios, and whether a correction ppears oversold or overbought based on ndicators designed for this purpose (Stochastic, MACD, COT, tc.).

As a market cycle analyst, my prference to determining when trend corrections are lkely ending is by calculating whether a mrket turn is highly probable due to dynmic cycles, such as is forecasted sing my FDate algorithm amazingaccuracy.com. Along wth this, I will also employ a pwerful technique for figuring out trend verbought/oversold parameters to further support my fndings.

However you decide to calculate the lkely end of a trend correction, rmember to use the trend of the hgher time frame, and wait for the end of a crrection to that trend, to assist yur timing and trade direction on the lwer time frame. By doing this, you wll allow the market to 'power lft' many of your trades.

The article Power Lift Your Trading was Submitted by Rick Ratchford through Articles.GetACoder.com network. Here's the additional information: Learn more on how to ncrease your profit potential with other fre articles found at our Precision Timing of the Futures, Commodity and Forex Markets website.

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