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Hey there! My name is Nate and I write about trading for the WOLF Financial newsletter. If you are looking for more trading tips and tricks, I guarantee you’ll enjoy my content on 𝕏, @tradernatehere. Thanks for reading!

This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. These are my opinions and observations only. I am not a financial advisor.

The trend really is your friend and if you haven’t figured that out yet, you might be struggling with trading.

If you are wondering what it means to trade the trend, or how it is done, this newsletter is going to answer a lot of your questions.

It is really a mix of the right trendlines and time frames that you are looking for.

And I’ve got even better news for you. This topic is best discussed using visuals which means more charts!

The beauty of trading trendlines is they can be used with any time interval. So, we will take a look at a few different examples.

Trendlines can be applied to 5-minute candles as well as hourly, daily, weekly, or even monthly. Anything!

The trend really is your friend because it provides so much information.

As a trader, gathering the right information and letting probabilities work for you are key parts of your success.

Looking at an example, TTD has been in a downtrend since the summer of 2023 which is evident when looking at a zoomed-out daily chart.

TTD daily candles in a downtrend

While markets have been making new all-time highs, this ticker has been making its way to lower lows.

You might be tempted to buy in, expecting a turnaround from a name that could just be lagging. This could be a good trade, but why fight the trend?

Shares are about to test the trendline again. If they break through with strong volume and then follow through the day after, that would be interesting.

This example highlights the need to zoom out and view larger time frames in addition to near term durations.

The bull case could look strong for TTD if you are not considering the likelihood of another rejection at the trendline.

Focusing on just the past couple of weeks gives too narrow of a view.

TTD daily candles, zoomed in.

Take time to analyze a variety of time frames, drawing in trendlines on longer duration timeframes first and then working your way down.

Also be sure to trade the right timeframe for your style of trading.

This might mean sticking to daily candles if you are a longer duration swing trader.

Or it could mean drawing trendlines on a 5-minute chart if you are a day trader.

As previously noted, we are at new highs for markets which might feel extended and ready for a reversal.

It could be tempting to take a short position while day trading, especially on big red candles.

But if the trendlines continue to form to the upside, there is no reason to think going short would be a wise trade.

Here is a look at 5-minute candles for SPY. There is no reason to short here.

Your bias might be that markets are overbought and need to cool off. That is fine, just don’t let your bias interfere with your trading.

There isn’t a trendline drawn that isn’t pointing sharply higher for the day in the chart for SPY above.

There was plenty of upside opportunity if you ignored any bias towards the market being overbought and instead traded the trendline.

This is why the charts, when respected, can be so powerful.

And this concept applies to swing trading, whether you are trading with the trend or identifying when it breaks, it can be an incrediblel tool.

One last example, RMBS highlights what can happen when the trendline finally does break. It can be violent.

RMBS daily candles broke trend.

While it can be the case that this break of trend will quickly recover, for RMBS the move was so large that I would have expected more selling to follow.

And that is exactly what we got.

A break of trend can be a great entry point for a trade and the level at which the trendline was broken can be used as a decent stop loss level.

There is a reason you hear it repeated often, “the trend is your friend.” I would advise not fighting with your friend.

Remember to trade the charts in front of you and have a great week ahead!

-Nate