S&P500 / US500 Example of How to Trade the Trend!
Updated
The first thing you need to do to trade the Trend is to Identify the Trend!
Question.. Is it an uptrend of a downtrend? How do we establish the trend?
On my chart I have from left to right I have...
1. Labelled the High, low, lower high and lower lows.
2. Drawn a trend line across the top of the High - Lower high - Lower high which established a "Down Trend" line in red.
3. I also have 2 ema's on there which are 50 and 100 period. You can see how red 100ema crosses under the green 50ema shortly after the High signifying a possible change of Trend to the down side.
At this point we see lower highs and lower lows we know the market is moving in a Down Trend and we will be looking for a change of Trend to up to enter Long positions.
4. Shortly after the 30th of October 2023 the market breaks out above the red "Down Trend" line signifying a change of Trend from down to up. There is also a Bullish ema cross and a small higher low is set. So these 3x signals will let us know the market is starting to move in an possible Uptrend.
5. At this point if you are a confident and or riskier trader you could enter the market by moving to a smaller timeframe and looking for other confirmations or if you are a newer trader and or want to play it safe and wait for definite confirmation of an Uptrend you can wait for the market to make a Higher High then on a test of the 100ema enter long but only after a bullish green candle closing above the 100ema. Place your Stoploss below that low.
6. As you can see from the chart as the market moves to the right there are multiple tests of the Uptrend line and Ema's which are all good locations for possible entries long in the Uptrend. Always keep moving your stoploss up under the previous lows as the market keeps making higher highs and higher lows. This will lock in lots of profits for your long entries.
Also....
Once the Uptrend is confirmed you can put limit orders at the trendline or 100ema with a stoploss.
You can also use an oscillator indicator like CCI, MADC or a Stochastic when the market is approaching the lower trendline or the100ema for additional confirmation.
Trading View has some great alerts which you can set such as a trend line touch or cross and ema touch or cross so you don't miss any long opportunities or a notified when the market might be changing Trend!
Right now, the US500 has broken down from the lower trend line we will be looking for confirmation that the trend is actually changing before we consider opening a short trade.
The confirmations that we need are displayed on the left in the small downtrend.
Also reverse the same kinds of conditions we looked for when we were going long.
Usually the US500 goes up a lot more than it goes down so the time span for shorts is much shorter, a short trade would last week(s) as apposed to months for longs with multiple entries.
I'll post updates here as I see the Trend is changing.
Question.. Is it an uptrend of a downtrend? How do we establish the trend?
On my chart I have from left to right I have...
1. Labelled the High, low, lower high and lower lows.
2. Drawn a trend line across the top of the High - Lower high - Lower high which established a "Down Trend" line in red.
3. I also have 2 ema's on there which are 50 and 100 period. You can see how red 100ema crosses under the green 50ema shortly after the High signifying a possible change of Trend to the down side.
At this point we see lower highs and lower lows we know the market is moving in a Down Trend and we will be looking for a change of Trend to up to enter Long positions.
4. Shortly after the 30th of October 2023 the market breaks out above the red "Down Trend" line signifying a change of Trend from down to up. There is also a Bullish ema cross and a small higher low is set. So these 3x signals will let us know the market is starting to move in an possible Uptrend.
5. At this point if you are a confident and or riskier trader you could enter the market by moving to a smaller timeframe and looking for other confirmations or if you are a newer trader and or want to play it safe and wait for definite confirmation of an Uptrend you can wait for the market to make a Higher High then on a test of the 100ema enter long but only after a bullish green candle closing above the 100ema. Place your Stoploss below that low.
6. As you can see from the chart as the market moves to the right there are multiple tests of the Uptrend line and Ema's which are all good locations for possible entries long in the Uptrend. Always keep moving your stoploss up under the previous lows as the market keeps making higher highs and higher lows. This will lock in lots of profits for your long entries.
Also....
Once the Uptrend is confirmed you can put limit orders at the trendline or 100ema with a stoploss.
You can also use an oscillator indicator like CCI, MADC or a Stochastic when the market is approaching the lower trendline or the100ema for additional confirmation.
Trading View has some great alerts which you can set such as a trend line touch or cross and ema touch or cross so you don't miss any long opportunities or a notified when the market might be changing Trend!
Right now, the US500 has broken down from the lower trend line we will be looking for confirmation that the trend is actually changing before we consider opening a short trade.
The confirmations that we need are displayed on the left in the small downtrend.
Also reverse the same kinds of conditions we looked for when we were going long.
Usually the US500 goes up a lot more than it goes down so the time span for shorts is much shorter, a short trade would last week(s) as apposed to months for longs with multiple entries.
I'll post updates here as I see the Trend is changing.
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