Traders and Investors have all heard the saying "always follow the trend" and any investor or trader should heed this advice as fighting the trend can lead to large losses.
However working out what the trend can be is not as easy as it would first appear.
On a daily chart your favourite moving average may be moving down but on the weekly chart you find that apart from some bumps the same moving average is still pointing upwards.
This is where the concept of a Triple Screen is very useful.
On your first screen you look at a longer timeframe than what you are trading and label the trend direction as the major trend.
Do not under any circumstances trade against this major trend.
On your second screen you are looking for a timeframe one level lower than your long timeframe and you need to wait for a temporary trend in the opposite direction to the major trend.
So in a major uptrend you are looking for an oversold condition on the daily chart to signal a good potential buying opportunity.
In a major downtrend you are looking for a temporary overbought condition on the daily chart for a potential shorting opportunity.
Once you have identified an opportunity on the second screen you then use a third screen to fine tune your actual entry to get a better price rather than immediately jumping into market.
In his excellent book Come into my Trading Room Alexander Elder outlines a number of trend following methods and he is the originator of the idea of using a Triple Screen.
He also outlines his own technique for dynamically creating and trailing stops.
Employing good money management is vital for all traders and the Safezone formulas from Dr Elder are excellent.
Dr Elder is a fully qualified pshychologist and as a trader himself understands the mental challenges which face all traders and investors.
Many traders have used his techniques and advice to great effect and improve their trading and investing skills enormously.