What this means to me:
Markets establish a direction (up or down) in which prices will tend to continue over time.
What this belief gets me into:
This will encourage me to build and explore trend-following systems.
I expect to buy high and sell higher (or sell low and buy lower).
I expect to have multiple losers for every winner.
False breakout entries.
Trades that are in the red after entry but then continue as expected.
Looking to catch the meat in the middle of a move.
Need to define a way to identify a trend or start of trending behavior.
Looking at longer term trades (multiple bars of the time frame considered).
Exploring different markets.
Considering big picture (fundamental) ideas.
A way to classify markets: trending up, trending down, not trending.
What this belief gets me out of:
Picking bottoms or tops.
Following trends may keep me out of sideways markets.
If there is no trend, I may not be in the market at all.
A high win percentage for the system.
Concentrating on prices (trends) could distract me from psychological work.
Limitations of this belief:
Markets are not always trending. Looking for trends in a sideways market is bad for my account balance and bad for my personal psychology. I will need to give back profits before exiting a trade. I need to have reentry rules for both change of direction and continuation patterns. It could limit my ability to trade in a sideways market. No specific time frame is required, so any classification of market by trend needs to match the expected trade time frame. (A market could be long term up and short term down.)
Utility of this belief:
This will enable me to develop a way to classify markets: up, down or sideways (none). Having suffered losses when trying to pick bottoms (or tops), it is useful to keep me trading in the direction of the (longer-term) trend.
While this belief is a key for making sense of prices in the market, it raises many more questions. Time frame is important in determining trend. What do I need to see happen to believe a trend exists? How far must price move to reverse the direction of a trend? What identifies a non-trending (sideways) market?