Section 22: How to Use TrendX (Knowing when NOT to enter a trade)
How to Use TrendX
3. Knowing When to Avoid Entering a Trade
Understanding when to refrain from entering a trade is as crucial, if not more so, than knowing when to initiate one. While numerous indicators predominantly emphasize trade entries, there is a noticeable scarcity of well-rounded tools that effectively signal when to exercise caution and abstain from trading.
At dRisk, our team has consistently heeded TrendX alerts ever since we developed this indicator. With its predictive mathematical approach, TrendX excels in real-time identification of overbought and oversold conditions. This functionality empowers us to employ TrendX for various trading strategies, with one of the most critical applications being the ability to determine when NOT to enter a trade.
In the upcoming images, we will illustrate how TrendX can help steer clear of unfavorable trades that might otherwise result in losses.
Example 1
The image below presents an example where TrendX is absent from the charts. Both novice and experienced traders might be inclined to consider entering a long position due to the apparent bullish momentum and the closing of a bullish engulfing candle in the preceding three candles. In the following images, we will elucidate the reasons why choosing a long entry in this scenario may not be advisable.
Example 2
In this image, you'll notice that we're still on the same screen, but now we've integrated TrendX. It's evident that TrendX promptly notifies the user that the price is indeed overbought, signaling that initiating an upward position may not be a favorable decision.
Example 3
As evident in the image below, refraining from entering an upward position proved to be the wisest choice, as it would have resulted in a losing trade. Thanks to TrendX, which swiftly identified overbought conditions in real time and alerted users unmistakably, the knowledge to avoid this entry was gained. This action saved the user from incurring losses, showcasing the invaluable value that TrendX brings to the table.
