Saturday, January 14, 2012

Trend Average Explained

A lot of people have asked me over the past few months about the TA or The Trend Average so I decided to put together this post to explain it. The Trend Average is basically a calculation of the market's opening and closing prices for the preceding 2 weeks. In doing this calculation, we have a number for the short term trend that can guide us as traders and in essence create situational awareness that is essential for day and swing traders. The TA, in combination with other better known moving averages and Technical Analysis tools allows us to trade with more confidence while reducing our risks of being trapped in a position.

Over the last year or so I've added some elements to the way in which I trade the markets using the Trend Average. As volatile as 2011 was, not only was I able to navigate the markets without being on the wrong side of the market (and avoid big losses), but I was able to come out ahead without taking any substantial risks. So whether you use traditional technical analysis, elliott wave, or fundamental analysis the use of the Trend Average increases the probabilities of successful trades.

Below is a view of the Trend Average signals since I've started testing it in the summer. The green lines indicated a bullish trend and the red lines a bearish trend.

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