Hi ely,
Apologies, my last post was misleading. I meant to say that I've always struggled with trend trading in general (although I'm getting better at it, slowly), not that I've struggled with this particular strategy as presented by Richard. This is a reflection of me and my trading skills (or lack of them) and not Richard's strategy! If executed properly and with discipline (two very big 'ifs'), the probability of success ought to be much greater than 50%. There are a number of reasons for this:
1. A trending instrument is more likely to continue trending than it is to reverse (in spite of the comments in my last post). In other words, continuation is more likely than change.
2. There are trending stocks and there are trending stocks. What I mean by this is that Richard is very clear that only stocks with the strongest and cleanest of charts should be traded. Retracements must be shallow, consolidations short lived. There should be little or no evidence of any long upper shadows / spikes (in up trending stocks) and the low of each candle should be higher than the low of the previous candle etc.
3. Your point about joining the trend too late is a very good one. To help avoid this problem, I now look at the daily ATR of the stock. If it's already moved in excess of 70% of it's daily ATR - I leave it alone. Attempting to join the trend when the stock is at or beyond its daily ATR will reduce the probability of a successful trade.
4. Only take trades where the stock is moving in tandem with its sector and the main market. Richard prefers to monitor the futures for this purpose, Grey1 and subscribers to his 'Technical Trader' forum follow $INDU and I prefer SPY - the index etf. Make sure the market is on side.
5. You'll notice that many of Richard's trades are taken soon after the stock has breached the previous day's high or low (indicated by the heavy black line on his charts). The thinking here is that if the stock is trending down - for example - then all those people who are long from the day before are in a losing position and starting to hurt. As their stops are hit, the strength and momentum of the trend builds, adding to the selling pressure.
If all the above 5 boxes are ticked, the probability of a successful trade should well exceed 50%. Perhaps others can add to the list of what they look for before attempting to jump on board a trend?
Tim.
TIM
AN excellent thread,,
During my LIVE seminars I have called the market direction and few times asked people to get a dart and throw at any stock they wish and still make $$$ why ? simply because where ever market goes stocks will follow,,,
SO what is the point of stock trading and not just stick to Futures,, SIMPLE *** RISK management *****
The correlation between futures and cash is 1.. any move in cash results in the same amount of move in futures,, Therefore the risk is proportional to reward at any given time ,, As a result one cannot reduce risk ( except using his stop ) to control the losses if market goes against him
Stocks are different ,, you can choose stocks that are weaker/stronger than the general market ( this is why you have fund managers to stock pick , ) and hence you could even be wrong on calling the EXACT top and bottom and still the stock does not move against you by much ( due to low correlation ) ,, SO by choosing stocks that are weaker/ stronger than the market you can offset your losses against the market's direction ( depending on the degree of correlation between stock and the market )
In short you can reduce risk by choosing correct stocks and hence reduce risk to capital ,,
Example
lets say I called DOW short @ 8000 and short RIMM @ 50.. Lets say DOW went against me by 30 points,, RIMM probably would hardly move against me if RIMM on the day was weaker than the market ( you can use irajN minute code on the TT to choose the correct stocks )
Now if you choose 3 stocks ( diversification ) instead of 1 then you can reduce the risk even further which basically means you HAVE RISK IN YOUR MIND AT ALL TIMES.
I shorted 3 stocks in my 24th Oct Live seminar and as a result we took around 3$ run or more ( not sure ) in 1 trade and the stocks hardly went against us ,,
grey1
) Unsurprisingly, Richard gets pretty hacked off when - having put much time and effort into a thread like this - people start to question his motives with insinuating and insulting e-mails and PM's. As anyone who trades full time will testify, trading is an absorbing and demanding profession. Anything 'left in the tank' at the end of the day is best spent on family and leisure interests, rather than responding to petty minded people who stir up the emotions and drain one's resources. It is for this reason - and not for the first time - that Richard has decided to put this thread and T2W - on the shelf for the time being. Perhaps, if we continue to post to the thread with our trades, he may be tempted to return . . . 
