How to define a strong trend ?
- Thread starter moonmist
- Start date
I think the best thing is to be as scientific as possible and not let irrational thoughts cloud your brain.
For example, while some of you don't use indicators, I rather let the computer create HL, LL, DT, DB, HH, LH for me.
Obviously, you still need to examine the chart since a LL could actually be a HL if you look back through chart.
For example, lets say during the day, the chart made a LL that is the lowest that price went for the day. You then may have swing highs and swing lows through the day, but price never went lower than that support level. So when the chart creates a LL, it can sometimes be considered a HL if the prior LL was never breached.
For example, while some of you don't use indicators, I rather let the computer create HL, LL, DT, DB, HH, LH for me.
Obviously, you still need to examine the chart since a LL could actually be a HL if you look back through chart.
For example, lets say during the day, the chart made a LL that is the lowest that price went for the day. You then may have swing highs and swing lows through the day, but price never went lower than that support level. So when the chart creates a LL, it can sometimes be considered a HL if the prior LL was never breached.
IMHO:
Trading is an art, not an exact science.
Anyway, I do not have software to generate HL, LL, DT, DB, HH, LH, etc. I did write some scripts to mark the high, low and 50% retracement for the Globex and pit session, finding out the ascending/descending triangles, etc. After reading Handle123's posts, I also develop scripts to mark the integral level for oil futures, levels of multiples of fifty for ES futures, etc.
David Ellis from DE Trading / ITG told me a long time ago that when markets are going up - all he wanted to see were higher highs and higher lows. When markets are going down - all he wanted to see lower highs and lower lows.
And David was a very, very good S&P futures trader.
In terms of my own objectivity, I would say to start looking at longer timeframes in terms of your charting intervals. As in Daily, Weekly, and Monthly intervals.
I have always been astonished by the serious misapplication of timeframe intervals when it comes to using technical analysis and statistical data point sampling for determining true and legit trend in financial markets. My other point would be that the term strong trend means something different to an intraday trader than a position or swing or longer term player.
And David was a very, very good S&P futures trader.
In terms of my own objectivity, I would say to start looking at longer timeframes in terms of your charting intervals. As in Daily, Weekly, and Monthly intervals.
I have always been astonished by the serious misapplication of timeframe intervals when it comes to using technical analysis and statistical data point sampling for determining true and legit trend in financial markets. My other point would be that the term strong trend means something different to an intraday trader than a position or swing or longer term player.
Trading index futures i use 5 day levels to help me with trend , in trending markets i use the dynamic 5day50% area to define support in a trend . Once 5day50% levels are breached with some momentum i then look for the polar 5 day high/low as an adjunct to guage trend change . I use 2 different ma's with same period ( one based on close and other based on mid) for a visual on trend direction/strength , i have a couple of rules to help me stay with trends and not countertrend too quickly . All in all pretty basic but highly effective . Next year i will do a piece on trading individual indice using this very workable system . I used to be exclusively a price action trader but with my desire to algo trade ive had to use a method to mathematize price action , hopefully a workable code will be forthcoming in 2013 and then the money in my sleep will a reality , trader for over a decade now and im sick of screen gazing ......................
I love how this question on trends pops up on every forum on the Internet. It always has - and it always will.
Some say the answer is science and other say art. Some say there is no answer and then the unbelievers say trends don't exist.
Some say you need to ignore the noise in small time frames while other say that is where a trend is born.
I'll add my 2 cents: if you can't anticipate the trend it is harder to identify its birth and evolution and a strong trend can give few clear entries when it is on the run.
Decades back I learned to watch the 45 degree angle. If PA is advancing faster than the 45 line then it is very strong. It's a simple rule of thumb that needs a lot of refinement but if you want a short answer... 45+ degrees.
Now as to how a trend is born and evolves - that's a different story.
Some say the answer is science and other say art. Some say there is no answer and then the unbelievers say trends don't exist.
Some say you need to ignore the noise in small time frames while other say that is where a trend is born.
I'll add my 2 cents: if you can't anticipate the trend it is harder to identify its birth and evolution and a strong trend can give few clear entries when it is on the run.
Decades back I learned to watch the 45 degree angle. If PA is advancing faster than the 45 line then it is very strong. It's a simple rule of thumb that needs a lot of refinement but if you want a short answer... 45+ degrees.
Now as to how a trend is born and evolves - that's a different story.
In an UPTREND each cycle high should be HIGHER than the preceeding cycle high. The first hint an uptrending stock might be reaching a top is when it fails to make a new HIGHER-HIGH. Example of uptrend stocks at the close of Fri. Dec.28 are APOL,LVLT,NFLX,PDS,PPHM,UNXL, these are some stocks that are in an uptrend and can take actual trades in. Example APOL go long at 20.55 stop at 19.80, LVLT long at 22.95 stop at 22.20, NFLX long at 90.95 stop at 88.10. Your targets would be for APOL 3.4% from enter price,LVLT 2.7% from enter price, NFLX 3.8% from enter price. But if it were me I would capture 2.0% from enter on each of these stocks, get in get out with a min. 100.00 profit.
=============Quote from moonmist:
For the time being, I use EMA's, Bollinger band, trendlines/channels, momentum indicators,..... to decide whether to trade along the trend or against it. Still experimenting ...............
Mr Mo;
Most important,ema's,ema's;
keep records especially TREND vs counter trend PROFITS
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Its your business;
but momentum gets you out WAAAAAAy to early .I hate it;
it costs you much in profits, comissions.
mr murray;
wisdom is profitable to direct
