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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 two sets of criteria: trading momentum and direction momentum. The trading momentum represents the short term or immediate trend of the market, either positive(+) or negative (-). Based on this a Buy (+) or a Sell (-) signal is generated. In addition, every market also has a direction momentum representing the primary long term direction of the market. "TKATCHTHETREND" also analyses this longer term character of markets and generates either a positive(+) or negative(-) direction momentum signal. If the direction momentum is pointed in the same direction as the trading momentum, an even stronger signal is generated represented by a ++ reading for a Buy, and a -- reading for a Sell.---As well, for day traders, a daily momentum indicator is provided, either up or dn---.
In summary:
trading momentum up produces a (+ or "Buy") status signal
trading momentum down produces a (- or "Sell")status signal
trading momentum up plus direction momentum up produces a (++ or "Strong Buy")status signal
trading momentum down plus direction momentum 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".