The Grindy Trend
AUDUSD is a trend spanning several days. Grindy trends don't feel strong because they take so long, but after 3 days you look at the move and wonder why you didn't just enter at market and hold on. Ah, the benefit of hindsight! In real-time you'd await pullbacks that didn't seem to come. They emerged as narrow range pauses before the sellers hit it again. Shorting means you do so right into support lows. Normally you don't want to get in that habit since any deeper retracement can stop you out. Every method has it's day and in this case it favored the Breakout Players which is not a tactic for me.
When a trend is present I'll initially hold off to see what the buyers can muster. Waiting for more development also provides information about the nature of the trend - it's volatility, the likeliness if the whole move has completed or if I should expect continuation. The pullback also tells me the potential Reward:Risk in place. After awhile it becomes clear buyers are unable to lift the market. Visually the retracements are shallow. Grindy moves don't necessarily mean the sellers are ruthlessly overwhelming the buyers, they might just be slightly more aggressive. The lack of volatility makes trading these trends difficult as the market doesn't seem to move much in favor and keeps coming back at you. Over time it works its way lower, but there is any ever-present risk that any piece of news could reverse the market. I've yet to see anyone enter these trends and comfortably ride them to their destination. Yes there is a trend, but these are not my preferred type.
I will give these trends a shot, but only if it has left a lengthy consolidation. Otherwise they aren't worth the effort. At the point of entry I must regard it as Grindy trend. The distinction prepares me for their frustrating elements - the slow drift and the repeated tests back to my entry price. There is no point entering if I don't allow for a substantial payout. That will only be on my 2nd part, trailed conservatively. Part 1 will be taken as usual and is a necessary step in handling this type of trend. Once my partial profit is taken my stop stays at the original spot (grindy trends have a knack for hitting stops moved to breakeven). I do my best to stay with the trend, but once I have trailed out I won't re-enter due to the worse R:R. In my experience I tend to exit for logical reasons based on clues on the chart, but a day later it shows me there was a lot more left and I had gotten shaken out. It doesn't matter, all that matters is that each effort pays a multiple of what was risked
The Volatile Trend
GBPUSD shows a schizo market - alternating narrow and wide ranges, pullbacks are sometimes shallow and sometimes deep. The structure is clearly HH and HL, but good luck trading this trend. Even if you manage to get onboard and see the blast blow through all resistances it isn't easy to know how to take profits. In real-time the trade seems to be working well so why sell it so soon? But any greedy plans to stay with it sees the deep retracements slam back at you often trailing you out where you give back a chunk of the open profits. Volatile trends are often sparked by reports, but delude you into thinking they are strong. Many times they will be reversed straight back to test pre-report areas. I'm usually not on these types of trends because I tend to be flat prior to reports. However, occasionally if I have entered a trade and gotten a P1 profit I will be able to decide whether to risk P2 profits in case a report pushes further in favor. But whether P2 is stopped out or if I can trail for good profits is just luck. Like I said I can only afford to go for it because I have already taken a P1 gain. Once again, yes there is a trend, but these are not my preferred type. Trading whatever is present gets me involved in these trends, but the entire time I am cognizant I really don't like it. The recognition of the type of trend I am dealing with is what protects me and also dictates my actions - how I trail, how I pick a target, etc.
I don't have trouble with what I consider "normal" trends - the kinds that push in one direction, pull back towards a 50% retracement in a relatively orderly manner and also in a reasonable amount of time before signalling the trend may want to resume. When I see those trends I tend to hit them twice in succession and with little stress. I don't try to milk them for all they're worth - I just trail along as well as possible and am satisfied with my take. Defining what is normal is a tremendous help because it's clear when IT ISN'T WHAT I'M DEALING WITH. Usually what arrives are one of the two ugly sisters mentioned above. When faced with the Grindy or Volatile type I switch to a different mode based on my experience with them. There are probably several more kinds, but I don't need to elaborate on anything else. Highlighting these two other types tends to cover me most times.
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