This is a special form of entry technique to get onto a trend – that isn’t there?! Yet!
Normally one would wait for a sharp trend to show up, then establish the position only to see the trend vanishing in the next moment. The idea behind the “there is no trend” trading system is of course to be able to better participate in the whole move of a trend.
But exploiting the full swing of a trend like this has a price and that is clearly a smaller percentage of winners. Most often you buy into something on spec it doesn’t immediately start to run!
The direct version of this trend entering method is to buy into a trading range before a breakout occurred. Any range could be used, but especially one ahead of news dissemination is interesting. Pick a spot of a news announcement and get on the trend train before it left the station. Just enter the market in the calm zone and don’t place stop orders to catch a breakout. After being in, have one stop loss order on the wrong side placed, but leave out the typical profit taking limit order on the other side. Instead just sit tight if the price rushes into the right direction.
Of course, not every trade will become the monster trend winner. But the few home runs this “anticipating trading system” produces may be enough to easily beat the standard strategy. In essence, it shows that there is something wrong with the standard system, the profit taking goal and the calculating of a risk reward ratio. If the price goes straight into one direction, there is a trend and no reason to leave it.
A more progressive trading method would be to not wait for a news announcement or even a tight price range. Instead, use a swing trading oscillator system, a trading selection of volatile stocks that have the theoretical potential to fly and just buy into one of the trading candidates when it is a buy for the swinger system.
Used this way the otherwise for trend traders counterproductive system to buy oversold stocks may be combined with trend trading. One could argue that this is done by trend traders anyway, waiting for the price to swing back and then entering at cheap levels. But the whole idea is to do it even without an already ongoing trend, just in the wake of a possible potential, given by, say, a company with a good product and rising earnings.
Again, the exit has to be done differently. Don’t rely on the trading oscillator, or you would be simply trying to trade an oscillation. Just hold on to the position and hope for the large trend. Yes, this may be the quadrature of the trading circle, hoping finally becomes a valid trading strategy.
In a way this “optimistic trading system” is comparable to what many day traders or market makers do regularly. One of their day trading strategies, for the right day of course, is to buy early and cheap and then let the trend run into the close without bothering with intraday swings and profit taking goals.
