Today, we're gon na be talking about the three most popular indicators to use for trend trading. Aka trend, following., Hey everyone lead trainer with StocksToTrade Tim Bohen here, be sure to like share subscribe to the videos and ring that bell to be notified. As soon as we drop a new video on YouTube. Alright, that being said, let's get started with a little bit of get a terminology breakdown et cetera..

So when we talk about trend following trend trading, it is more, in my opinion, more of like a swing trade which, when we say swing trade multi-day to multi week to a long-term investing.. When I say that multi-month, possibly multi-year. Hey if you're Warren buffet. Maybe it's decades., You know well, if you're Warren, maybe it's centuries., But anyway, this is a little bit of a longer term strategy which is great..

I tell you all you got to do is bring up a chart of some of these technology stocks like one we're gon na talk about today, Asana, but I mean bring up a chart of apple or Microsoft or Tesla, or some of these multi-year. I mean ultimately, Microsoft, Apple, multi-decade, breakouts, and you know, especially from a lower risk type profile. I mean these are types of trades and stocks. You don't have to sit there and stare at every single day and worry about some sort of 20 % gap down..

So, especially if you're very busy - or you know again, if you're a part time trader swing trading is very, is a very great way to grow. Your account get some experience and you know make some profits obviously.. So when we talk about trend following it's a very simple idea, but I think often misunderstood. - It was kind of coined - I think by you know, go back to some of the turtle traders.

If you're familiar with that story.. Definitely research that., I mean I'm. I know I'm kind of a nerd I like history., I particularly like stock market history. And if you go back and and read and understand the story of the turtle traders, actually the the funny, if you don't wan na, read a book which I don't know why You wouldn't want to, but if you're familiar with Trading Places it's kind of loosely based on the idea of the turtle traders., You know that funny, Steve Martin and Dan Aykroyd movie, one of the greatest stock market movies.

Ever actually. I mean listen, probably one of the greatest stock market movies. I mean it holds up well., It's it's ridiculous., It's what happens when they get on that train. I mean it's if, if you're a fan of movies, there's like this flow to the movie and then all of a sudden, they get on the train and there's like this New Year's Eve party.

And it's like, I think they might have embellished a little too much. You know of something when the shoot went: there. But anyway great stock market movie. Great education.

- And you know the idea behind the trend or the turtle traders was this idea that it was a process and it can be taught. And that's what happens in Trading Places.. You know Dan Aykroyd's kind of the golden boy and they kick him out on the street. And then the the two old guys make the bet..

They pick Eddie Murphy off of the street and they're like hey. We can teach this guy., We can teach anybody trading. And that's the you know the thesis behind trend-following. Check out the work by Michael Cavell..

I've met Michael Cavell., Some of his books. I read them very early in my trading career and were very influential in my swing trading. Methodology. We've actually got a SteadyTrade podcast with Michael.

He's, got hundreds of of podcasts talking about trend following., So the short answer or the short breakdown is, you know, stocks that are steadily trending higher and keep in mind we're talking more real stocks here versus. Like sketchy penny stocks. I mean I know on the channel. We focus a lot on day trading.

You know crazy. Wild stocks. Today we're talking more real stocks okay.. The idea is that stocks in a steady, uptrend gradually off trending price upturning in volume, in a good sector in a hot sector like technology, going back to Asana cloud computing like Asana, they tend to trend higher and vice versa.

When they're trending lower. They tend to continue trending lower, especially when they fall out of favor.. You know, let's say I don't think it's happening anytime soon, but let's say for whatever reason: cloud computing, apps or you know having your data in the cloud. Let's say that goes out of favor for whatever reason.

And then Asana tends to put in multiple red days in a row: multiple red weeks.. Well then, there's a trend shift and it's probably gon na trend lower and it's you know it would be a solid short-sale.. Today, we're gon na talk about the long side of things, especially from a longer term hold.. So when you've got that hot sector, higher up-trending volume, hot sector, good breakout breaking through whole dollar, half dollars.

- You know you can see. This was a great breakout at 50. At 75, at 80 90, even into a hundred. - And here we are - we may touch 120 before the end of this video..

Who knows where it'll be at by the time you see it., But what we're gon na look at is: how do we determine that steadily? Upturning stock And I've got those three indicators that we're gon na talk about., Mostly it's moving averages. And when we talk about moving averages, there's a lot of different timeframes and they kind of go in and out of Vogue. Right now. The most popular is the 2020 moving at 20 period, moving average and the 200 day moving average.

Those are kind of the two in Vogue.. Now again, if you're watching this video six months a year from now, they may start focusing on different timeframes. Understand that technical indicators are a lot like fashion.. They tend to go in and out of style.

And the reason I bring that up. Understand that the best technical indicators like VWAP, the one we mostly focus on from a day trading perspective when they're in Vogue when they're in fashion, they become a self-fulfilling prophecy.. So when that 200 and that 20 day average cross happen, it's setting off alerts on a lot of trader's desktops, it's triggering algos., So there's a lot of algorithms that are trading that., So you wan na join that trend.. Next is our momentum indicators which are again those breakout levels., We're looking for multi multi-day, multi-week multi-month multi-year, all time breakouts 52 week highs..

Those are what I consider to be the momentum indicators because, as you're breaking through those levels that goes back to those whole dollar, half dollar areas as well. And the century mark, they call it with 100 or whether it be a 50 or whether it be 150 Or 200 you'll see volume come in you'll, see those alerts come out and people tend to pile in to those key type levels., And that's what I, when I think of a momentum indicator it's breaking through those levels. And like let's say I mean Asana, obviously has Red days., So we're gon na look for those reclaims of breakouts that sets off those alerts.. I mean I keep mentioning that point.

What we're trying to do with these entries on these breakout, these swing trades. We want to join the trend ultimately., So why I keep mentioning those alerts. Is we want to be joining the big, the big guys. I mean I mean ultimately listen if a billion dollar hedge fund is buying Asana..

I joked about Warren Buffet. If Warren Buffet's buying Asana, what do you think you want to be doing? I mean follow the money, follow the smart money, follow the smartest money and that's what they're doing. So you wan na join them.. Next is we're looking at those trend, lines and those chart patterns, and you know, trend lines are very unique to the person.

And you know, ultimately you can you know it's really just looking for those higher highs, those higher lows and looking at that, you know that Kind of steadily up-trending stock. And then you're looking for that trend break., So I just drew a you know a quick line here, kind of drawing this and then I'm gon na give another one to this current breakout. And what I look at is: I tend to Focus on the low of the day., So you can see it's Asana was steadily up-trending all through the summer and the fall, and then they had earnings and really going vertical., And I think that's the power of drawing these lines is, you can see. I mean this stock steadily up-trending now going straight vertical., But if you're swing trading this stock, you let this trend line, continue and you let it work.

And then you're selling on that trend, break. And again trend lines very unique to you., Use it. How you want. A lot of the times: you'll see traders kind of average, the candles., So they'll kind of draw that trend line through the bodies of the candles..

I like to focus on those lows of each candle.. If you don't understand Japanese candlesticks, you need to.. I don't care if you're day trading, swing, trading or investing you need to understand. Candlesticks.

We got a bunch of videos check it out, take advantage of the archive. But ,'cause to me, if that, if, if it's that low or higher low, then that's very, very bullish to me. The higher highs, I mean listen, these stocks are volatile., They chop around., But as long as that stock is is holding a higher low, that's very, very bullish to me. And that's a trend I either want to join or if I'm already in the trade that I'm chilling and I'm letting that work..

So that being said again, I really really think even if you're a short-term trader, you know trend following the book, which is one of Michael Cavell's book. I still remember, reading that. I dunno. I always remember it because a lot of breakthrough moments - and I and I remember exactly where I was.

Tahquamenon - Falls in the upper peninsula of Michigan. Beautiful, beautiful place. Camp. There a lot with my kids, especially when they were little., And I just I remember, being there by the Tahquamenon River inhaling this book..

I mean this is you're talking geez, probably 11 12 years ago, and I still remember it., Mainly the beautiful sceneries, but then coupled with just recognizing the simple idea of joining the trend and leaving when the trend breaks and great book. Again. Cavell's got a great podcast.. He's got several books.

Understand the turtle traders. And even if you're, not a long-term holder. I firmly agree with the idea behind the turtle traders and that idea boiled down to. I think, and I firmly believe this anyone can do - this.

Okay. Now you have to put in the work. Okay, it's not like. I can just give you this piece of paper and you'll magically be profitable., But if you're passionate and you put in the time the work and the effort, I think anyone can do this.

And that's what that's the basis behind the thesis of the turtle traders.. They just put an ad in the paper and like 95 % of them were successful because they follow rules. If you're trying to figure out trading rules, if you're trying to figure out discipline, if you're trying to figure this out check out the SteadyTrade team okay. Again, I am I love teaching this stuff and I truly believe if you're like, as I already said, if you're very interested in this., If you're consumed by trading like I am 18 hours a day, I'm thinking about trading it can be taught, and I can help you Do that with the SteadyTrade team.

Check out the link below and we'll see you next time.