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That's true. But if you trade that way in a market that's offering weaker trends with larger pullbacks, then you might be stopped out a lot.
Moving to a different timeframe is a good way to adapt your trading to different market conditions but the key is knowing when to use one timeframe versus another.
That might be what it boils down to. I try to break these decisions down into objective guidelines but it's very difficult as there are so many different variables involved. Sometimes you just have to know it when you see it.
It is an art to find out, whether the market is in breakout/trending mode or mean reversion mode. Probably one of the most difficult things to do. There is a number of factors that have an impact:
-> prior day (balancing, reversal or trending day)
-> expected news releases
-> POMO weeks
-> time of the day
-> night session volume
etc.
I have found that the FOREX markets, if they trend, will reliably continue this trend for some time, so that would be a good environment for pullback trades. However, they do not always trend.
Would love to have a more simple method to determine the market's mode.
By the way it is all about targets. If the market is trending, you need to let the profits run, otherwise you don't.
Consider trading moves rather then trends? There are up and down moves, in down trends, up trends, in ranges, in every type of market environment, as long as the market is moving. I never know the overall trend of the instrument I'm trading beyond the 150 bars or so on my trading chart.
