Hey hey: what's up my friends, so in today's episode i want to share with you. When, should you not trade with the trend? Now you might be thinking, but right now you always tell us to trade with the trend man what's going on, so yes, i get it. I am a strong advocate of you, know, trend trading trading with the trend, but there are scenarios there are times right where it's not favorable, to be trading with the trend, and it's much better to just you know remain on the sidelines. So here are three scenarios right where i advocate right, not trading with the trend and just you know remaining on the sidelines or if you're an advanced trader, you can even take the opposite end or take a counter trend.

Trade number one when the price is overextended from a respected moving average. So, for example, let's say the market is in an uptrend series of higher highs, higher lows, and you notice that this market, this trend right, tends to respect the 50 period moving average. It has, you know, re-tested it three times, so you can see three times. It respects this 50 period moving average.

So at this point in time right, the price is very far away from the moving average. It's just you know, had a strong run up higher and it's quite the distance away from the 50 period moving average. So you can imagine that if the price is very overextended from the moving average there's this like empty space right on your chart. So when you notice this huge empty space, this is assigned as a signal to you that you don't want to be trading with the trend.

Why? Because this is when this market is prone to making a pullback, possibly back towards the respected moving average like the 50 period moving average, and if you were to be trading with the trend, if you were to buy, you will likely get stopped out on the pullback. Make sense so this is why, if you notice the market and up trend respecting a certain moving average and is overextended away from it, don't trade with the trend right, if possible, just stay on the sidelines. Number: two uh! You don't be trading with the trend when the price is far away or when the market is far away from a price structure. So, for example, let's say market is at range.

It made a huge bullish, breakout right now. Oh, we know market is in an uptrend time to buy, not quite because if you analyze the chart right, it's a huge bullish, breakout out of resistance. If you were to buy right now, where do you set your stop loss? You would probably have to set your stop loss. I'm guessing you know, a logical price structure would be below the previous resistance, which could now actually support, but the problem is the price has moved too fast too soon and if you're to be, you know, chasing the breakout.

You know trading with the trend. The market right is uh, the stop-loss is very far away. Okay and again right. What people do is you know i'll set uh, you know fixed, stop loss.

I don't know 10, stop. Loss 20. Stop loss, alright, depending how much i'm willing to lose. What happens if the breakout fail, it becomes a false breakup.

You will get stopped out. Market makes a normal pullback. You get stopped out, because your stop-loss right is at a poor level to start with. So again, if you notice the market has, you know, broke out aggressively and you think, oh, it's an uptrend.

It's time to buy just hold your horses first right because you don't want right to get stopped out on the pullback or reversal all right. So that's number. Two, when the price is far away, or rather when the market is far away from a price structure, in the case of you know, price breaking out of resistance move up too fast. The resistance area is very far from your entry price right now.

Just let the trade go. Don't change the breakup number three in an uptrend right. Sometimes you might be able to draw trend channels right. Train channels are just simply trend lines.

You just draw parallel trend lines, one for the upper end of the trend and one of for the lower end of the trend. So it kind of looks something like this right: a trend channel okay. So if the market is in an uptrend, it respects this trend. Channel sometimes so clearly, if the market is in an uptrend and it's within the trend channel boundaries.

Clearly, if it's at near the upper boundaries for an uptrend channel, you don't be buying any upper boundary. Why? Because, if it's contained within the channel there's a good chance, it could come back down towards the lower part of the channel, and when that happens, you will again get stopped out. So in essence right. What i'm trying to share over here is that, yes, market is trending, it could trend, but it doesn't mean that you want to blindly buy, because if it's far away from an area of value, if it's far away from price structure, if it's far away from a Logical level for you to set your stop-loss, then you don't want to be chasing the trend because there's no logical place to set your stop-loss.

That's one number two: when the pool back come, you will likely get stopped up because you randomly put a stop loss on your on your on your trade. Make sense so so, where i'm getting at is that you know don't trade far away from an area of value, even though the market is trending. So this leads to the point where, if you want to trade with the trend trade, it from an area of value, it's like girl, so an area of value could be things like the 50 period moving average. If that's a healthy trade at the market respects the 50 period, moving average look to enter your trades near that area of value near the 50ma or if market is trending higher.

It comes back and re-test support. Look to buy that near that area, value near the area of support or if it's respecting a sudden trend line, bounds off three or four times when it comes back for fifth time, for example, and there is a bullish price rejection, look to trade from that area Of value don't chase the markets don't buy when the the trend is overextended, because again, when the pullback comes, you will likely get stopped out. So let's do a quick recap: number one! Don't trade with the trend right when it's far away from a respected moving average number: two: don't trade with the trend right when the market is far away from me from a price structure. Number three: don't trade with the trend right when you realize that within the trend is near, the upper trend channel right, for example, in an uptrend okay - and the fourth thing to share - is that trade from an area of value? Not you know when the price is far away from it.

So with that said, i wish you good luck and good trading. I will talk to you soon. You.