Establishing a trend

[dbphoenix]

Quote from funky:



true, a better risk/reward entry would be to reverse after price crosses the 20sma and then reverses back over to test the last high. then you could treat the breakout the other way as a confirmation.

When it comes to trend, tho, an MA is just a substitute for a trendline. Plus, using a trendline avoids the whole issue of what length the MA ought to be and whether it ought to be exponential or simple, etc, etc. If the trendline is broken, the MA is probably irrelevant.

 

[Kiwiboy]

Quote from dbphoenix:



As for the HL and LH, you don't know until the bar is finished, which is why you might want to consider a smaller interval. At the very least, maintain a chart with a smaller bar interval alongside so you can see what's going on "underneath" your primary chart.

This is exactly the problem - getting an entry point when using a 10 min bar. I'll try the 5 minute from here, and keep a 1 and 3 minute to try and "anticipate" the 5 minute.

Thx
KB

 

[Kiwiboy]

Quote from dbphoenix:



Even if a violation of the last reaction low ensured a new trend direction, an SAR would not be appropriate unless he were trading breakouts. He might want to wait for a retracement and short the lower high.

and the previous higher low (from 12pm) wasn't taken out anyway, so why SAR?

 

[Kiwiboy]

Here's today's graph attached.

I've gone to 5 minute to help with entry, with assistance from a 1 and 3 minute to try and anticipate where the 5 minute candle is gonna end up.

Pretty good day to trade the trend, patterns easy to pick even on the 5 minute.

 

[dbphoenix]

Quote from Kiwiboy:



and the previous higher low (from 12pm) wasn't taken out anyway, so why SAR?

You'll have to ask funky.

 

[funky]

Quote from Kiwiboy:



and the previous higher low (from 12pm) wasn't taken out anyway, so why SAR?

i was suggesting using a method with the 20 sma as your trigger. forget about the 12pm low. the 1:30 low, which breaks the 20 sma is your trigger. there are two ways to reverse position now. wait until a retest of the high that gave way to the break of that 20 sma, with a stop on other side (5 sma should not violate that high), or you could reverse as that low is broken. like others have said, the preferred method would be to take the former exit/entry since breakouts rarely have as good of risk/reward parameters as retracements do.

 

[dbphoenix]

Quote from funky:


since breakouts rarely have good risk/reward parameters.

What evidence do you have to support this statement?

 

[funky]

Quote from Kiwiboy:

Here's today's graph attached.

I've gone to 5 minute to help with entry, with assistance from a 1 and 3 minute to try and anticipate where the 5 minute candle is gonna end up.

Pretty good day to trade the trend, patterns easy to pick even on the 5 minute.

well, if you are serious about using multiple timeframes, check out the daily chart with the 5,20,40 on it. that 1130 bounce was right off of the 20 sma on the daily (and a floor pivot, and yesterday's low!). must be aware of these things -- they are a dead giveaway most of the time.

and why do you not trade the first half hour? yesterday's high was a perfect place to enter at about 935. there was a floor pivot there as well! easy money!!

keep up the good work

 

[funky]

Quote from dbphoenix:



What evidence do you have to support this statement?

i was speaking in relative terms vs. trading retracements.

 

[dbphoenix]

Quote from funky:



well, if you are serious about using multiple timeframes, check out the daily chart with the 5,20,40 on it. that 1130 bounce was right off of the 20 sma on the daily (and a floor pivot, and yesterday's low!). must be aware of these things -- they are a dead giveaway most of the time.

and why do you not trade the first half hour? yesterday's high was a perfect place to enter at about 935. there was a floor pivot there as well! easy money!!

keep up the good work

However, none of this has to do with trading trends, which is based on lower/higher lows, lower/higher highs, reaction lows and highs, swing points, trendlines. Moving averages are useful only in the sense that they are moving trendlines. The "bounce off the 20sma" probably had less to do with the MA than it did with the previous half-day's congestion at that level. The instances of MA non-support on the daily are far greater than the instances of support. Therefore, one must look elsewhere for the reasons.