Trend Breaks and Hold Levels in Trading

Key Concepts

• Trend Breaks

  • Often misunderstood as entry points.
  • Serve as trigger points, not entries.
  • Shouldn't be mistaken for market entry signals.

• Hold Levels

  • Critical for establishing trade entries.
  • Continue to hold until a trigger point is met on either side.
  • When untested and respected, they create trends.
  • Ensure profitable trades if hold level holds.

Trade Strategy

• Entry and Exit

  • Enter at a hold level, not at trend breaks.
  • Use hold levels to create swing lows and trends.
  • Define profit targets and manage exits based on trend collapses.

• Trigger Points

  • Define the exits for trades when trends don't hold.
  • Trigger points help in determining when to exit trades profitably.

Analyzing Trades

• Example Analysis

  • 6 AM Example: Entry at hold level around 6 AM created a trend.
  • Misinterpretation led to exit at trend break rather than hold level.
  • Emphasis on entering on hold levels and using trend breaks as exits, not entries.

• Scalp vs. Swing Trades

  • Smaller time frames (like hourly) are used for scalp trades.
  • Longer frames and untested hold levels indicate trend continuation for swing trades.

Practical Approach

• Choosing Time Frames

  • Beginners may start with higher time frames (4-hour) for simplicity.
  • Advanced traders can use lower time frames (1-minute to 15-minute) for more frequent trades.
  • Complexities increase with lower time frames.

• Risk Management

  • Always have clear exits: trigger point-based or profit targets.
  • Ensure hold levels are respected before entering trades.

Summary

• Profitability

  • Hold levels ensure profitable trades if respected.
  • Consistently entering and exiting based on predefined rules helps in maintaining profitability.

• Skill and Time Frame Considerations

  • Use higher time frames until comfortable with finer details.
  • Move to lower time frames as skills improve for more frequent trades.

• Trade Entry and Management

  • Clear understanding of hold levels and trend breaks is crucial.
  • Constant review and adaptation to market conditions.