Some ways to define a Trend.

[wrbtrader]

It is easy to analyze good price action after the fact, it already happened, has very little chance of going nowhere, cause we already know it was a trend.

Newbies say wow, we old timers know the fairy tale already.

In reality, its not easy for most traders to analyze the price action even "after the fact" beyond just saying its Up or Down. Too many threads here at ET proves such...strong up trends where price action is rising 20 to 40 points and the trader counter-trend trades the entire way up accumulating losses and then saying he/she didn't realize it was a trend. It's amazing what one's mind will see with "real money" in a trade and all the stress that comes with that trade versus what one's mind will see when they are not in a trade...mind boggling for most except for the few. Lots of threads too about that psychological phenomenon involving traders saying they traded well on demo, simulation or the backtesting had a positive expectancy...then when they traverse into real money trading...they are losing traders.

The issue then seems to not be "after the fact" analysis. Its really how traders react to the same information when they have real money on the line versus no money on the line.

Regardless, without historical data...you really can't do any chart analysis or backtesting. Therefore, there is a need for historical data (after the fact data) regardless if you're doing chart analysis or backtesting. Simply, there's a need for "after the fact".

In contrast, a completely different situation that you may be mixing up with is when someone uses "after the fact" (historical data) to say they opened a trade position here and closed the trade position there when such was never mentioned in real-time as it occurred. If you're talking about that...its completely different in comparison to someone analyzing or backtesting historical data (after the fact data) to make a real-time decision about something that may or may not occur in the future.

Last of all, based upon ET newbie members that past few years since the financial fiasco of 2008...most do not say "wow". In contrast, their reactions is completely the opposite.

 

[Johno1]

There was a documentary titled Bulls and Bears back in the late 90s, and the main protagonist was a big American speculator on the floor of the then SFE. He described trading as thus "the market is like a comet going thru the sky, you can never quite grasp the market. You can analyize charts up the ying yang but you are only ever looking at the tail, the past price action (you are wasting your time). What you need to do is learn to climb aboared the comet, and ride it as far as you can. I want to be part of this moment(the now)" What he was saying is forget the past and take what is happening now and project this forward and trade that. I can say unequivically that this approach works. Reflecting back, they were some pretty wild times back then, I used to write naked options puts and calls on index futures and hedge with futures, boy am I glad that I've been cured of that particular madness. When the implied volitility went to levels I had never seen before in 98 it took me six weeks of hell to unwind my positions, it nearly bankrupted me .lol
As they say, " what doesn't kill you just makes you stronger".lol
Cheers John

 

[Sergio77]

In reality, its not easy for most traders to analyze the price action even "after the fact" beyond just saying its Up or Down

One of the best statements I have read in ET.

As far as identifying a trend, I use the 20-100 ma crossover. If you are a long term investor, you can even use a 50-700 crossover. It all depends on the time horizon. Talking abaout trend is like talking about food you like.

 

[wwatson1]

I really like that bit about the comet! But if you have ever tried to jump on a "comet" then watched it re-aline with a longer trend you will burn up just like a comet does!

 

[wwatson1]

I kind of see what he's saying but bit stupid really because its like saying "look the market is going up lets buy!" Then you look and its actually an exhaustive rally up to 200 weekly moving average in a 10 year downtrend haha

 

[wwatson1]

And everyone who is looking at the so called comets tail is selling

 

[Johno1]

And everyone who is looking at the so called comets tail is selling

All I will say is the reason that I remember that comment is that it lead to a major change in my approach for the better, but each to their own.
Cheers John

 

[wwatson1]

Yes we all remember people that helped us on our way

 

[kut2k2]

Let's bottom-line things. As I've said elsewhere, trend following (aka Trading with the Trend) is the simplest and arguably the best trading metastrategy there is. Presumably this is why the OP asked for a (presumably workable) definition of trend and what I tried to supply to him. Obviously with talk about comets and emphasis on the untradeable past, not everybody agrees with my definition. That's cool; it's differences of opinion that make horse races possible. But in the end, your definition of trend has to lead to a workable solution (aka a trading strategy) or all this talk is just cocktail philosophizing (as in "who gives a damn?")

Trend following is the umbrella for a thousand and one different timing strategies, most of which are worthless or nigh worthless because they do such a poor job of actually finding trends, or of distinguishing true trends from false trends. Your job as a trend trader is to find the best worthwhile trend trading strategy you can. Everything else is just hot air.

 

[wwatson1]

Ok well all I have on my charts is a 50 100 and 200 ema, when price is above all off them and they are separated nicely in the same direction on 5 min 1h 4h and daily I define that as the trend.

this is an uptrend

I'm long a small amount on this pair, if price retraces to the 50 ema I will buy a little more, same goes for 100 and 200 ema's