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[Oluti]

You've recently read how and why a trend pauses or interrupts. Once you recognize a strong trend, then you only have to recognize the type of correction, sharp or sideways, and then decide what it will take to confirm the trend's continuation. Today, you will learn simple ways to confirm that the trend has continued and if you decide, to join that trend as it ideally continues.

Which Correction Point to Enter

The two types of corrections we looked at in the last article was sharp and sideways corrections. A sideways correction moves around between a price ceiling and floor making the shape of a rectangle. Another common correction pattern looks like a wedge or triangle between converging trendlines. Both of these types of corrections have after an established trend or a new trend with strong fundamentals and often result in a strong thrust in the direction of the larger trend which trend followers seek to join.

The sharp correction comes close to the higher low, but does not break the higher low proving the trends existence once a the prior high is taken out. When looking to the point of trend continuation, traders often look for the break of the lower high in the direction of the trend. Many FX trading trend followers will place their entry order to buy above the higher low so that they'll only enter on a breakout. The benefit of breakout trading is that it prevents traders from being involved in a non-trend continuing move, which can take up both time but can also increase risk.

The other approach that trend traders will take because it favors a better risk: reward is to attempt to buy the higher low in an uptrend. There is a key benefit and risk to this approach. The benefit to this approach is that it allows traders to risk less while seeking a larger reward relative to their risk. When a trader has a better risk: reward, they can reduce their overall win rate and still end up for the week, month, or year. The risk to this approach is that you may be buying as a new downtrend is starting since you are buying low.

Buy low and sell high is popular in stocks as the stock market has an upward bias but the FX market is a dualistic market meaning one currencies strength is at the other currencies expense. The easiest and most recent example as of March 2015 is the EURUSD. As the drop from 1.3992 to 1.04 in less than a year has amazed many people, very few have benefited from buying low especially compared to selling short in the direction of the trend like this series favors.

Decide when the Trend has stopped

One thing every trader must do, whether a trend trader or not, is to decide at what point you're view is wrong. The easy thing to do, which is a quick ticket to trading failure, is to not accept responsibility for a trade and wait for it to swing back in your favor. Because trends have a habit of continuing, if you're on the wrong side of a big move, the merciless market will drain your account. This is only quickened if you're using leveraged but delayed if not.

What Trend you can expect based on the Correction Type

Few, if any trends are worth fighting but knowing what type of correction is taking place can let you know what is ahead. Typically, the weak and flat corrections happen towards the end of the trend as few are willing to aggressively fight the prevailing trend. The sharper trend corrections tend to happen near the beginning of the trend meaning that an entry off of this type corrective move may have more upside than a flat correction. Either way, it's best to keep an eye on prices that create a higher low and mark those in case they are broken in future corrections, which could mean the trend is over or at least no longer worth the risk exposure.

 

[lioralace]

How to Actually Ride the Trend When Markets Take a Breather (and Not Get Wrecked)

Alright, so you’ve spotted a strong trend. Sweet. Now what? The rookie move is thinking trends just go straight up forever—nah, even rocket ships need pit stops. The tough part is figuring out if the market’s just taking a quick nap, or if it’s about to roll over and die. Here’s where knowing your corrections actually matters, not just textbook speak.

Honestly, you nailed the basics: sometimes the market stalls out and just wobbles sideways, kinda bouncing between support and resistance like it can’t make up its mind. You spot these rectangles or triangles popping up right in the middle of an uptrend—like the trend is pausing for a smoke break. That’s a sideways correction for you.

Other times? Correction’s sharp, a fast nosedive or spike, but—heads up—it doesn’t wreck the overall trend structure. If we’re talking uptrend, the price doesn’t crash past the last higher low. Think of it like a crazy dip at a party, but the vibes are still good.

Now, everybody wants to know: when do you actually hop back in? Two main camps here.

First up, the safe crew. They sit tight and wait for an actual breakout. In a bullish trend, that means the price has to smash through the last high before they dare to click “buy.” Less flashy, but hey, you’re less likely to get smacked by a fake-out. No shame in being careful.

Or, if you’re the risks-for-breakfast type, you buy the dip near the higher low. Sure, you catch better risk/reward. But you might also be buying right before the trend flips and leaves you holding the bag. Catching falling knives? Unless you’re a magician, that ends badly. That’s why you don’t just YOLO in—check the ingredients: is there a legit bounce off a key Fib level? Candlestick vibes look decent? Get some backup with volume or trendlines. Don’t be a hero for no reason.

Forex? Now that’s a savage playground. Stocks drift up over time, but in currency trading, someone’s win equals someone else’s loss. Case in point: EUR/USD 2015. Folks trying to “buy low” got smoked over and over while the downtrend bulldozed through. Sometimes you’ve just gotta roll with the trend and sell the rallies, let the knife fall on its own.

Biggest rule nobody talks about: sometimes the best trade is no trade. If the trend snaps that key level—a higher low in an uptrend—quit clinging to your old bias. Pride kills accounts. Just be real: set a stop, know your exit if you’re wrong, and don’t marry your trades.

Look, trend continuation isn’t wizardry. You just need to read the price, figure out if the correction is just a pit stop or something worse, and pick your entry like you actually care about your money. Whether you’re hunting breakouts or pouncing on dips, always have a game plan. Trade smart—or you’re just gambling with a slightly fancier name.