Trading Using The Trinity Philosophies
The Trinity Philosophies are 3-step methods designed to help you think systematically, regardless if you’re trading with candlesticks, lines or any chart view.
Now that you have at least some basic knowledge on how to read financial charts, the next question that would come to mind is how do we trade them?
Here are some “philosophies” that you can follow whenever you want to trade in any market whether it’s stocks, forex, commodities, or cryptocurrencies.
These philosophies will eventually help you develop multiple trading profiles – from trend following to swing trading and even momentum trading.
Learning these philosophies takes time and practice but with whatever path you choose, you can be assured that this will serve as your solid foundation in trading the markets.
Since all of us have different thought processes we have divided them into three philosophies. What’s common among these philosophies is that you are indirectly taught how to follow trends with these thinking patterns in place. Don’t forget to manage your risks accordingly as well.
This philosophy is the common among investors and starting traders since most of us are taught that the way of earning from the financial markets is to “buy low and sell high”.
This method can be an investor’s best friend since he doesn’t need to monitor his positions everyday.
The limitation of having this kind of philosophy is that they are strict in selling near resistances only. They might even tend to avoid holding longer once the price breaks a 52-week high or all-time high.
Applying this philosophy can be effective mostly in bear or sideways markets or “buying the dips” when the opportunity shows itself in a bull market.
If you want to put it in an Elliottician’s perspective – you only ride from Wave 2 until the resistance of Wave 1.*
There are certain situations that this trading philosophy can give you a quick buck such as trading bounce plays or swings but if you’re starting out, the Purgatorio philosophy is already enough to get the feel out of the markets.
- Buy low (Bounce/Buy on support)
- Follow the trend
- Sell near resistance
If you manage to master this philosophy early on, you can move on to the next philosophy which deals more on breakouts.
As mentioned earlier, our minds are wired differently. This is why we have this philosophy for those who believe in the saying “what goes up, tends to go higher” instead of the usual “what goes up, must come down” mantra.
This trading philosophy is usually effective in bull markets where everyone is euphoric. It can also give you high returns in a short amount of time. However, this philosophy will require a lot of mental preparation.
Again, if you want to put it in an Elliottician’s perspective – you only ride from the breakout of Wave 1 until the next resistance (or the projected Wave 3 if the financial instrument is making all-time highs)*
- Buy high (Breakout/Buy on resistance)
- Follow the trend
- Sell near next resistance
This is a combination of the previous philosophies. You will need to gather a lot of patience and discipline should you decide on implementing this in your trades.
Basically, you are playing the roles of a bounce trader, a breakout trader, and a trend follower. This philosophy is also considered to be the hardest to execute.
You are also exposed into more advanced trading tactics such as buying and selling in tranches once you incorporate this philosophy in your trades.
- Buy low (Bounce/Buy on Support)
- Add or hold (shares/positions) when prices are near resistance
- Follow the trend until it breaks or sell higher/on strength
Anticipate or react? The choice is yours
Sometimes trading the price chart alone may not be enough for you. Some traders would also look for catalysts that could drive the markets to new highs.
When digesting news/fundamentals, we have the option to anticipate or react to whatever information is presented to us just like what we discussed in our line trading crash course.
The Trinity Philosophies should be enough for you to create your own trading system. Feel free to tweak these as well once you get the hang of trading in the markets.
*If you prefer using our custom Elliott Wave and Fibonacci trading system, feel free to continue through the next section of this guide.