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Coach's Playbook Posted by Team Topstep October 14, 2020

[VIDEO] How to Trade Trending Markets - The Coach's Playbook

One of the first lessons most traders learn is also one of the most difficult to put into practice. The “trend is indeed your friend,” but there’s no guarantee that you’re going to make money when you trade in the direction of the underlying trend. The Topstep coaches are back this week to share some of their best tips for finding low-risk entry points when trading the trend.

Funded Trader Shout-Out!

This week’s Funded Trader shout-out goes to a Stephanie A., who is crushing it trading Nasdaq futures. With $5,500 in profits today in her Funded Account, we’re rooting for her hold on to as much of it as possible!

Low-Risk Entry Points

While personal preference does come into play when it comes to charting intra-day timeframes, the endgame goals are the same for everyone. No one wants to buy the top of the move or sell the bottom of the move, so timing becomes critical.

First things first, you need to identify the direction of the trend in the market you’re tracking; it can only be going in one of three paths; up, down, or sideways. Draw your trendlines, identify previous swing highs and swing lows, and look for former areas of congestion. Doing this will paint a clearer picture of how the market could react when it reaches certain levels.

If you’re trading a market that’s trending higher, the trick is to wait for moments of weakness to purchase at a discounted price. Knowing how to pick out technical patterns on your chart can help you avoid buying the move’s high. Flags, pennants, triangles, and rectangles are all classic continuation chart patterns typically easy to identify if you know what to look for. Moving averages and momentum oscillatiors are also crucial for spotting potential support areas and identifying possible overbought situations.

These are just a few of the many ways to find low-risk entry points in a bull trending market, but they are also some of the most basic. Get familiar with chart patterns and technical analysis to keep you on the right track.

Trade Management

Another vital lesson traders learn early on is “never let a winner turn into a loser.” Trade management should be a crucial component of your trading strategy. As Mick points out in the video, you need to give your trades a little room to breathe, but you should also have a good idea of where you’re going to exit a trade before you get into one.

Manually entering trailing stops rather than automating them and putting them around areas where your confidence will have trouble getting through can keep you in the market a little longer. Not every trade will be a home run, so remember to take some profits when the market gives them to you.

Trade Well!