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2
How many times have you heard the phrase “Trade with the Trend” or “Don't fight the
tape'? While these phrases may be delivered with the best of intentions, have they ever
actually served you as a way of taking money from the market on a consistent basis? If
you are like me and almost all traders I know, the answer is very probably a resounding
“NO'!

That being the case then, how have these cliches survived in market lexicon? Well the
answer is that while most of the time these axioms are wrong, there are a few times
when they are spectacularly right!!!

You see the times these axioms are right is when the market is amidst such a powerful
move that it is indelibly imprinted on our brains. And any attempt to the go against such
a powerful trend, can result in a hard to forget trading lesson.

On the other hand, the fact is that the majority of the time one can buy a dip and sell a
rally and make out okay. Most of the time the market is backing and filling even if there
is a bias for general direction. So yes in fact most of the time you actually can “fight the
tape” and come out ahead.

This leads to another market cliche that trading in and out on the dips and rallies is akin
to “picking up quarters in front of a steam roller.” The message being that yes most of
the time you will be successful, but be careful because you risk getting steam rolled in
one of those infrequent but powerful trends!!!

So how then to best make money in the market??? Clearly the market axioms are not
really helping!!!

Is all we are left with a choice of buying dips and selling rallies for meager gains while
hoping to avoid the major Tsunami that wipes out all or a large chuck of profits or....
waiting for that powerful trend, and whilst we wait, we continue to watch our paper
profits come all the way back against us.... ???

Does not seem like much of a choice!!! It isn't much of a choice!!!

Is there a way to change the game? Is there a way to take some of the high win rate of
the “Steam Roller Trade” AND take advantage of the “Don't Fight the Tape” spectacular
moves???

My answer is a definitive YES you can enjoy many of the benefits of each market axiom
at the same time in the same trade!!! I have proven it can be done in my actual trading
accounts.

First I am not willing to give up on a high success rate. Taking profits and fueling your
account is good for both your dollar capital and your mental capital!!! Second I want to
to take advantage of the occasional Tsunami move.

The key to doing this is watching for the “Sign Posts”. The “Sign Posts” the market
gives are clearly measurable and quantifiable. As such you do not need any special talent
to recognize them once you know how to measure and what to look for. There is no
ambiguity.

What is even better is that the market cannot move without these “Sign Posts” being
present. It does not matter the market. It does not matter the time frame. The market
ALWAYS leaves these sign posts.

First of all, yes we DO want to “Trade with Trend”. But how EXACTLY does one know
what the trend is???

One common answer is “look at the chart”. Okay but eyeballing is not quantifiable.
Remember the “Sign Post” MUST be measurable and unambiguous, requiring no special
judgement.

So then we move to a quantifiable answer such as “price is above or below a moving

average”. It would be beautiful if it were so simple, unfortunately the moving average is
woefully inadequate for defining trend. A market is ALWAYS either above or below a
moving average, yet the large majority of the time there is not a worthwhile trend in
either direction!!!

As usual the market does not give up its secrets easily. On the other hand the market
simply cannot make the kind of move we are looking for without tipping its hand on
these “Sign Posts”. It happens every single time!!!

That is NOT to say we expect to win every time. Obviously nothing happens the same
way in any market every single time. Fortunately it doesn't need to.

When these “Sign Posts” appear I can be confident that the odds are stacked in favor of
the trade. And this expectation is the same no matter the market, no matter the time
frame. Forex, stocks, ETF's futures, options,1 minute charts, hourly charts, tick charts,
daily and weekly charts etc etc. All of it.

The basic premise behind all of this is ....

“TRENDS DO NOT GIVE UP WITHOUT A FIGHT”

Lets look at the principle using an analogy that will create the visual. If you throw a shot
put it is moving forward (ie above the moving average) and in the air (ie its going your
way). However very soon after it hits PEAK MOMENTUM it will fall to the ground.

So we want to avoid the “shot put” trades. Those are the trades that fizzle out quickly!!!

Now what if we took that shot put and packed it in a cannon with lots of gunpowder and
lit the fuse? Well for sure that ball would fire out of that cannon with a ton of
momentum!!!

Even more important, is that that ball will continue to move forward long after PEAK
MOMENTUM!!!

Financial markets --- stocks, forex, futures or any traded market all behave exactly the
same way!!!

That is long after peak momentum they are still trying to move forward!!! In other
words TRENDS DO NOT GIVE UP WITHOUT A FIGHT!!! And we can use that
consistent and repeatable pattern to profit if we know what to look for and then how to
get on board.

Once we have identified the “Sign Posts” of a trend we have the information we need.
But the market is rarely as straight forward as “If Condition A exists then buy /sell”.
Rather the market is like an onion that reveals its secrets only by peeling back a layer at
a time.

So after the “Sign Post” ---- further along the time scale of the chart after the “Sign Post”
appears ---- the next layer sets up and that is how we get into the high probability trades
with Tsunami potential!!!

Often times, I am not looking to get gigantic moves. But most times I get more then
enough to make a tidy profit. And if the Tsunami Trend Trade happens, then I am
positioned for that!!!
LLets look at
a some ch
harts so youu can see what
w I mean an. The folllowing chaarts identify
fy
wwhere the “Sign Postt” occurs and
a then do own the tim
me scale thhere is a buuy or sell enntry
bbox ...

AAt the “Siggn Post” my

m measurees tell me the
t trend iss for real. A
At the entryy box I gett a set
uup to enterr.
The above is ana intradayy chart of th
he SP 500 stock markket futuress contract.
How
wever the time period d along thee y axis is rreally of zeero importaance. It doesn't
mattter the timee frame or market. Thhe Sign Poosts are theere in all tim
me framess in all
markkets.
Thiss is a daily chart of th
he stock market. As I said the mmarket doesn't know what
timee frame it is. The straategies apply across thhe board.
Thiss is a daily chart of Apple.
A Sommetimes it taakes a whiile for a lowwer risk enntry to
showw up after a Sign Posst. And yess sometimees one neveer shows uup. The marrkets
are NEVER
N ass simple ass “if A then
n B”, and thhat is okayy too, as a nnew train iis
alon
ng everyday y.
Not all thrust moves
m willl trigger a Sign Post. Sometimees those mooves continnue on
and sometimess they don''t. I call theese “Shootting Stars” because oof the increeased
risk that they fizzle
f out. Whether
W th
hey continuue or reverrse is of noo consequeence
becaause there are plenty of lower riisk opportuunities eveery day. I oonly trade SSign
Postts, and avo
oid potentiaal Shooting g Stars.
The principless work preccisely the same
s on doownside ass they do on the upsidde. The
abov
ve chart is the populaar forex paair EUR-US SD.
CONCLUSION

The guiding principle to success in trading is “TRENDS DO NOT GIVE UP

WITHOUT A FIGHT. This is one market axiom coined here, that you can actually
depend on!!!

Knowing the quantifiable and clear identifiers of those trends, and then how to
enter with defined risk is the key to trading success.