Indicator for Trending vs. Trading Range

B

BrooksRimes

Need a little help ... many good minds here.

I'm working on a system where I need an indicator that basically answers "Are we in a trend?" Yes/No.

I've attached a sample chart of RUT with bars marked as an example. First group is in a range, 2nd group downtrend, 3rd group uptrend.

So these are daily bars being looked at for a trade that could potentially last for multiple weeks.

It seems to be more complicated than just looking for lower lows and lower highs in a downtrend because their can be pauses in the action.

It would be a nice bonus, if in a trend, to have something to indicate its speed or strength (i.e. how fast its changing or moving).

I've worked with stuff in the past and have been away for a while. Any help is appreciated.

Thx,

Brooks
 

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Quote from BrooksRimes:

Need a little help ... many good minds here.

I'm working on a system where I need an indicator that basically answers "Are we in a trend?" Yes/No.

I've attached a sample chart of RUT with bars marked as an example. First group is in a range, 2nd group downtrend, 3rd group uptrend.

So these are daily bars being looked at for a trade that could potentially last for multiple weeks.

It seems to be more complicated than just looking for lower lows and lower highs in a downtrend because their can be pauses in the action.

It would be a nice bonus, if in a trend, to have something to indicate its speed or strength (i.e. how fast its changing or moving).

I've worked with stuff in the past and have been away for a while. Any help is appreciated.

Thx,

Brooks
More...
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Assume that data is accurate;
that period is an uptrend-open to close =its up,
12/21 thru 1/21 ,its up trend,
12/21 thru 2/21, its up trend ............................
52 week data[RUT]= uptrend for sure
All data [ i found briefly]since 1986/87 Uptrend for sure..........

2 year trend = bear trend/downtrend

But [a] What's 200 day trend,[its up] & 200 day moving average??
b]50 dma?? Both are important trend measures, more so than 5 0r 8 days/boxes
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c] all the data?????[10 years and all trends??]


Brooks R;
Certainly could call the first box a range [or sideways trend];
but to simplify things i usuall figure [a] uptrend or[z] downtrend, Sideways trends [ranges]dont matter much unless one is selling/buying options......................................................

Momentum indicators do measure price change speed [like a speedometer]

RUT ,750 area [ not exact]is some resistance, watch it also.
Wisdom is profitable to direct.
:cool:

For a good example of most all data downtrends[especially past 10 years];
see ticker ''C''
 
Quote from BrooksRimes:Need a little help ...
I'm working on a system where I need an indicator that basically answers "Are we in a trend?" Yes/No.
More...
Nope, not "a little help" - you are simply looking for the holy grail.

If there was a clear answer to "are we in a trend" you would just follow the direction until signal "end of trend" arrives. Meaning the power to print money in unlimited amounts.
That won't be possible.


In my view "trend" is existing only in the eye of the person that is looking at a chart.

Think about 2 small experiments:
1. Assume account size of 10k. Enter with 1,000,000 USD into a trade of EUR/USD. You will immediately have the feeling of being in a trend because your account is going up or down very significantly.

2. Assume working for a big bank and having to buy 1,000,000 shares of AAPL for longer term investment. If the stock moves 1$ that won't give you the feeling of being in a trend. You need much bigger moves ("trend") in order to compensate for the wide range in which you could buy the shares / the slippage that has to be expected when selling.

Therefore my point:
The perception of "trend" is dictated by the account size resp. the leverage used.
There is not really something like "trend".
 
Trends are only clear in hindsight. Each new tick can be either a continuation or the first move in a reversal, at the time you have no way of knowing which it will be.

Knowing how to pick trends isn't the holy grail. Understanding how to manage market uncertainty is as close as you can ever get to it!

Good luck on the journey

Johno
 
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