Commodity Futures
The Trend Is...
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How to use the System
"TKATCHTHETREND" is a futures trend following system designed and developed by Ron Tkatchuk. It is designed to identify trend reversals early and maintain positions in the direction of the trend until such time as the market trend changes.
The extent to which any particular market remains in a defined trend will dictate the number and frequency of system changes and the accompanying number of changes in system status. As well, a change in contract month monitored may generate a different set of system signals. The information contained in "TKATCHTHETREND" is strictly based on technical analysis with no regard for fundamental considerations.
A prominent Commodity Trader once said that markets remain in trends 29 out of 30 times regardless of the time period chosen. If one accepts this, the key to successfully trading markets is to identify the trend of the market and only trade in the direction of the trend. This precisely is the goal of "TKATCHTHETREND".
"TKATCHTHETREND" analyses the trend for each market based on three sets of criteria: weekly momentum, daily momentum and hourly momentum.. The weekly momentum represents the primary long term direction of the market, either positive (+) or negative (-). In addition, every market also has a daily momentum representing the short term or immediate direction of the market and an even shorter momentum reading represented by the hourly momentum.. "TKATCHTHETREND" also analyses these short term character of markets and generates either a positive(+) or negative(-) daily and hourly momentum signal. Based on this an overall Buy (+) or a Sell (-) signal is generated and displayed as system status. The system status is derived from the majority of the momentum models, either positive (+) or negative (-). If all three momentum models are pointed in the same direction an even stronger signal is generated represented by a ++ reading for a Buy, and a -- reading for a Sell.
In summary:
two out of three momentum models up produces a (+ or "Buy") status signal
two out of three momentum models down produces a (- or "Sell")status signal
all three momentum models up produces a (++ or "Strong Buy")status signal
all three momentum models down produces a (-- or "Strong Sell")status signal
Finally, within general trends, either up or down, markets become overbought and oversold. Numerous methods are available to identify market extremes and these become appropriate places to adjust positioning as one "trades the trend". While these adjustments are entirely appropriate, one should always remember that the overriding consideration in all trading should be to "NEVER TRADE OPPOSITE THE TREND OF THE MARKET".