How do you determine trend direction?

[ljyoung]

Believe I said I trade a 900 second chart and use a 300 second chart as an indicator. The reason for using seconds vs minutes is that with my charting software, which is Ninja Trader, if you use seconds for ETH and minutes for RTH then you can have both ETH and RTH in the same workspace. Otherwise you can't.
I use two workspaces - RTH and ETH, the former with 8 charts the latter with 10 charts. Time frames are 30, 15, 5 for ES and 30, 15, 2 for YM then 1800, 900, 300 for ES and 1800, 900, 120 for YM.

My error, FWIW, I use 10 charts with RTH, formerly the former and 8 charts with ETH, formerly the latter. A right trendline (RTL) is the right side of a channel and this is all that many people draw. If one adds a left trendline (LTL) then one generates channel. IMO, a channel is much more useful than a single trendline. Trendlines and channels add order to 'apparent' chaos and point out that the market moves right to left not up and down. I am not knocking the PA tribe when I say this, not that they would care anyway.

I believe YM very frequently will lead ES in breaking a trend line (RTL) or setting a retrace or reversal point as a prelude to a RTL break. This is not quite a Boolean but it is very close. It is why though I just trade ES, I always have YM to look at. Trendlines are liquid entities that are obviously there to be broken. It is not a question of them working or not working. If there is a solitary spike bar or a breakout failure, then one simply fans the trendline to establish a new RTL. To not get sucked in on these line games, look at where the bar closes in relation to the trend line and whether the break was made with high volume. If the LTL is 'broken' then reset the RTL to match the steeper slope.

IMO the most important thing is to draw a trendline using the method of Victor Sperandeo. It eliminates ANY subjectivity and that is critical. Fuzzy feelings about where/how the line should be drawn will facilitate a bilateral orchiectomy in the most brutal of fashions.

 

[SunTrader]

Tom DeMark method of trend line drawing is simple and mechanical. Not arbitrary or subjective at all. Plenty of info available including on youtube.

 

[ljyoung]

Tom DeMark method of trend line drawing is simple and mechanical. Not arbitrary or subjective at all. Plenty of info available including on youtube.

Tx ST. Interestingly Sperandeo and DeMark were/are contemporaries. The former (born in 1945) first published in 1991, the latter (born in 1947) in 1994. A Sperandeo TL is drawn left to right whereas the DeMark method does it right to left. I prefer the former since the TL can be extended 'infinitely' forward. They both can reach comparable endpoints so take your pick.

 

[SunTrader]

TD Trend lines extend infinitely as well.

I also like his qualifiers to trade with or fade breakout.

 

[Apophenia]

C'est vrai, Laissez Faire - indeed a trend day. Now une question. At what reasonably precise moment (say on a 300 second chart) did the trend change, which set up the trend day, begin?

C'est vrais **

 

[ljyoung]

Merci. C'est vrais.

 

[Apophenia]

Merci. C'est vrais.

Pas de quoi =P

 

[Apophenia]

Markets & Market Logic (Nice Read (Last Chapters)) :

Any successful trader approaches the marketplace from a risk standpoint similar to that of the local: he wishes only to enter those positions where he can enter the market, and either profit or extract himself from his position, if he has any adverse assessment of his situation, without facing a loss in capital. In other words, like the local, he is willing to either take a profit or get out breaking even or with a small loss, avoiding a large loss. But his approach does not include a willingness to " take a profit or loss, whichever comes first. "
(Synthetic Action)
He tries - through management - to gain free exposure. In other words, he is not trying to predict the future, but merely to understand what is going on in the present and have either a break-even or profitable situation to take advantage of.

[...]

Predicting in a market of uncertainty puts most individuals in a situation where they do not benefit from the learning experience, since they are not actively monitoring the market. They do not consider the storehouse of experience they have built up as consumers in other markets and do not apply it to their operation in the organized markets.

[...]

Yet most traders concentrate primarily on discovering the direction they feel the market is headed, giving diminished attention to their trading strategy, and the least amount of attention to themselves and how they function as humans and confident, rational decision makers.

 

[ljyoung]

Agreed. Nice read. Prediction - no. Anticipation - yes. Anticipation requires attention because you do not know when 'it' is going to happen, you just know that it is going to happen. As in, for example, anticipating the break of a RTL and preparing for a reversal. Whatever your anticipatory construct is you must know when you failed to anticipate correctly and make the appropriate adjustment. I am here just restating the last sentence of the first paragraph.

It is the 'willingness' which is consequential. As someone once said, "To make money in the stock market, you must be in the stock market". This same individual also said that when you become an effective trader, you will react with what he called 'sports memory'. That is my aim.

 

[Apophenia]

Agreed. Nice read. Prediction - no. Anticipation - yes. Anticipation requires attention because you do not know when 'it' is going to happen, you just know that it is going to happen. As in, for example, anticipating the break of a RTL and preparing for a reversal. Whatever your anticipatory construct is you must know when you failed to anticipate correctly and make the appropriate adjustment. I am here just restating the last sentence of the first paragraph.

It is the 'willingness' which is consequential. As someone once said, "To make money in the stock market, you must be in the stock market". This same individual also said that when you become an effective trader, you will react with what he called 'sports memory'. That is my aim.

Speculation. Yes. Anticipation. No =P You don't know what will happen (Forget bout' When (As you said)). But you know what could happen among moult (Fr) alternatives. IF this happens then I'll do that (opportunity dictates strategy).

Agree that one has to be able to read the conditions (Signals) and not let the costs (If Random) taking care of his bankrupty.

Nice citation =P Make sense. Skin in the game (No Pain, Full of BS). "Sports Memory" is build up over time. Life teaches how to live it only if it's lived long enough. Rule #1 is to Stay in the game. Experiments are better teachers than Observations. Uh ... May the force be with you.