In my first steps when trading the financial markets, I anxiously searched for the best trading system.
The best Buy and sell opportunities that would yield the most profit.
Yes, I didn’t mention the stop loss, as I was not convinced of its imperative significance at the time.
Nevertheless, I strongly believe today that every system should include the exact condition of a stop loss.

However, the question that I asked myself was this:
What is the condition to buy, and what is the condition to sell?
This is I was looking for.

Every beginner spends an enormous amount of time identifying the best entry.
For me, it was a bit different.
I spend many months, not to mention years, searching.
Yes, it was an exciting journey and the massive amount of knowledge gained is indescribable!
But let’s start from the beginning.

After reading tons of books and attending many seminars, I came to realize that the concept of trend could perfectly fit the base I was looking for.
“Buy during an upward trend and sell during a downward trend.”
This is something that almost all trading “gurus” will agree on.

But what is an upward and downward direction?
I must reveal here that apart from my technical analysis knowledge, I also boast of my programming skills.
I believe that because of these programming skills, I managed to develop an analytical mind and, most importantly, be inclined to detail.
Back to the market direction, though!

What I was really looking for was a formula of the upward and downward direction.
What are the minimum requirements?
Is 100% correct?
I had to drop that, as nothing is 100% after all!
Well, the answer to my question was straightforward.

Two higher tops and two higher bottoms for an uptrend, as they call the upward direction and
Two lower tops and two lower bottoms for a downtrend.
As you might have guessed, two new unknown terms appeared.

Tops and bottoms.
Let me explain this better.
Imagine a price chart where the prices are rising.
Beautiful right?

Specifically, rising prices do not move in a straight line, instead, they follow a zigzag path.
So, they move upwards, then pull back a bit, and then move higher to continue this pattern.
The top is the highest price reached before prices pull back, while the bottom is the lowest price reached before moving higher again.

To put everything together, an uptrend is 2 consecutive higher tops and higher bottoms.
Similarly, a downtrend is defined as 2 lower tops and lower bottoms.
A buy signal is generated when the price exceeds the second top, and a sell signal is generated when the price falls below the second bottom.
Now, I finally have a base to build my system on!
Stay tuned for more trading tips!