Yeah, all traders are interested in "trend", which is closely related
to the old trader idea of "momentum". This is similar to the
"bowling ball" analogy, but in reality there is no such thing.
Prices trend, and have momentum because Market Makers
benefit from forcing the population of traders to trend... But
let's get into the issue of trend prediction.
My research and development work has been in the field of
Micro Scalping, so I am interested in predicting Micro Trend.
First of all, most traders use "lagging" indicators based upon a
"descriptive" indicator based upon Price movement. Describing
an existing observed trend, using maybe linear regression or
some such thing, is only "describing" what we see, but it is
NOT "predicting" the future price behavior.
What I seek, and have found after painstaking R&D work, are
"leading indicators" of trend continuation, and trend change.
BUT how could we have a "leading indicator"? It seems all we
can do as humans is to describe what we see, and how can we
know if it will continue, or when it may change?
My answer to that is that "randomness" is only an opportunity to
find "order within what seems to be random", which means find
a predictor. What could be such a predictor?
In a nutshell, Market Makers move markets through their overwhelming
power, relative to retail traders. BEFORE Market Makers change a
trend, they reposition their patterns of Bids and Offers on the
Depth of Market, aka "the Book". So, proper Book Analysis is
able to predict (ahead of time) both Trend continuation, and the
process of Trend Change through "reading the minds" of the
Market Makers.
This applies mostly to short term Trends, but it is successful in
turning what seems to be a Mystery or Random behaviors into
predictable, and thus "tradable" price behaviors. Because Market
Makers drive the markets, they "know" where they are headed
next. By analyzing their behavior patterns, we may be able to
"read their minds".
Now that results in a truly "leading indicator" which is what traders
want, since ALL trading depends upon predicting the future outcome.
I reliably see trend change indications often minutes before the
move becomes revealed in price movement, at which time it is
too late to enter. In micro scalping you must be in "before" the
price move is revealed to the trading public, who have only Price
to look at (or indicators based on price).
Good Trading !
HyperScalper