Trend Trading For Dummies
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The first decision you make with the five-energy method is whether you’re going to go long, go short, or stay out. Trend simply refers to the direction of the market — up, down, or sideways.

[Credit: Figure by Barry Burns]
Credit: Figure by Barry Burns

Trade in the direction of the trend when you can get early into a new trend. Consider early to mean the first two retraces (wave lows in an uptrend or wave highs in a downtrend). A retrace in a trend is a small (in price range) and short-term (in time duration) price move against the direction of the trend.

Buying a retrace of price down against the trend potentially allows you to enter at a lower price, as opposed to buying as price is moving up, thus allowing you to adhere to the adage “buy low, sell high.”

The figure illustrates a first retrace in the trend as evidenced by %D of the stochastic indicator (used as the cycle indicator) getting below the value of 55 for the first time after the 50 SMA turned up.

[Credit: Figure by Barry Burns]
Credit: Figure by Barry Burns

About This Article

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Dr. Barry Burns is the founder of, which he created to help students shorten their learning curve in becoming professional traders. He was also the lead moderator for the chat room, has written numerous articles, and has been featured in several books and online trading radio interviews.

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