eMini Bull Bear Trading Method

How To Determine Overall Trend Of The Market

The chart above is the eMini Dow Daily OHLC Bar Chart. My first trading course I put online was called the eMini Bull Bear Trading Method.

In 2009 on YouTube, I recorded 9 videos documenting this trading strategy:
eMini Bull Bear Trading Strategy.

We will start our next discussion, in areas, I believe are important to understand as a trader. They are: TRENDS, WAVES, and SUPPORT and RESISTANCE.

HOW TO DETERMINE OVERALL TREND OF THE MARKET

The TREND (overall) as a DAY TRADER is determined from the DAILY Chart. This is the big picture of the market you are trading, as a day trader.  In addition, I like to utilize the 50 Bar Simple Moving Average (SMA) relationship against the 200 Bar Simple Moving Average (SMA) to help me determine the overall trend.

I believe, simply trying to trade a moving average crossover, without a momentum indicator, is my definition of insanity.  I have used all kinds of momentum indicators in the past. Other traders use indicators like: CCI, MACD, RSI, Stochastic, Williams PercentR and many other numerous indicators to help them trade in the markets.

What I honestly believe about trading, now after years of experience, is the most important component to consider …

What is the Mass Trader Psychology (MTP) of the Overall Market? 

If you can determine MTP as a trader, then you will make more money than you lose. Understanding MTP of the market you are trading determines the ultimate success or failure of an individual trader.

In my opinion, the most efficient way to quickly determine MTP is to determine the overall trend of the market you are trading. The chart directly below shows the first two components of the eMini Bull Bear Trading Method.

They are Price Action represented by the Open, High, Low and Close (OHLC) Bars and the 50 Bar Simple Moving Average (SMA) Line, represented by the rising black line cutting through prices.

The SMA allows us to smooth out the Price Action. Additionally, it will show a snapshot picture of the market trend.  The Daily Chart below is from the eMini Dow, (Dow Industrial 30 Stocks), which gives us our first glance of the overall trend, in the market we are trading.

When the simple moving average (SMA) is going up then the overall trend of the market is LONG a (Buy), meaning there are more buyers than sellers; the exact opposite is true for the SHORT a (Sell) of the market.

Now, the 50 BAR SMA by itself, can be a little deceiving. This is why I like to use another simple moving average, the 200 BAR SMA, in addition, to the 50 BAR SMA. The combination of these two simple moving averages (SMA), really helps paint a picture, of the overall trend on the daily price action chart (OHLC).

For instance, if the 50 BAR SMA is above the 200 Bar SMA, then you would say the market is in an uptrend, and the reverse is true for a downtrend of the market.

So, if we correctly determine the TREND of the overall market utilizing the 50/200 BAR SMA relationship, then you will have a accurate picture of the market.

In the picture below, we would say the eMini Dow is in an UPTREND, because the 50 Bar SMA (black line) is above the 200 Bar SMA (purple line) on the Daily Chart.

Wasn’t that easy peasy lemon squeezy?

Next Training: Waves: Waves in the Market

 

Kind Regards, Good Trading and God Bless,

David M. Knight
TradeCraze

P.S. eMini Bull Bear Trading Method YouTube Video Series

P.S.S. TUDTF Here …

P.S.S.S FDTBC Here …

 

About The Author

David M. Knight

I am a 30 Year Futures and Commodities Trading Veteran. In addition, I enjoy games of skill and chance like: poker, craps, blackjack and roulette. During my professional career, I have developed and implemented successful trading strategies and methods; along with winning systems in games of skill and chance. Join with me on our mutual journey together.

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