How to Trade Better – Larry Williams

*WHEN TO GET IN – WHEN TO GET OUT – TREND CHANGE SIGNAL*

There are probably as many ways to determine trend change as there are traders! In this day of computers, the fancy math boys have really beaten the numbers up to develop a trend change mechanism. In a very large way trend change is a moot point, as it just tells us what has transpired with no assurance it will continue in the future.

MY CENTRAL THESIS:

Here it is, conditions cause major up and down moves, trend change. Without the conditions being present, trend change has little validity. Back a trend change with conditions and you get rip roaring bull/bear markets.

I would like to think you now understand some of these conditions, such as the Commercials (i.e. Commitment of Traders Report Commericials). Let me add to your arsenal a trend change tool. The tool illustrated in the following charts is a simple 18-day moving average of closing price, that’s it, nothing fancy here.

SUGAR CHART 1

Notice the dots…notice how they appear at important trend change points.

The dots on the chart appear when there have been two days totally above the average for a buy and two days totally below the average for sells. This is the set up for the change. Then some select short-term buy/sell signals can be used for your entry. Markets do not alway trend like this, there is risk in trading. Results will vary and no technique can guarantee making money. What you are seeing here is a tool I have used for 30 years.

I teach more specific entries in my Sure Thing Commodity Trading online course, but as you can see, there is power to these points.

For example, I have taken two big trend markets – the up move in T Bonds and the down move in Lumber, as well as a choppy one, Gold.

Treasury Bonds Chart

Gold Chart 3

Dollar Index Chart 4

As you will note the appearance of the dots usually kick off trend changes of consequence. (But not always) That’s the good news for the start of the year; we can determine trend change. This is not a new phenomena; the following charts are from 2000 (note the changes in software since then as well!)…I used these charts back then, to illustrate the same point I am making in 2011.

Sugar Chart 5

Wheat Chart 6