Defining a trend over a given time period x is easy, and can be done by any number of methods. However, how do you choose the value of x? Choosing x is arbitrary, and trading a trend going forward based off of x will be randomly distributed. The smaller the value of x, the more random the movement of price will be. That is until you reach the HFT time scale and can possibly get a structural advantage over other market participants.
You are left with two fundamental trading strategies based on price action alone. Trade the momentum in the direction of your defined trend, or fade price weakness toward the direction of your defined trend and get out quickly in either case if you are wrong. However, since your choice of time frame is arbitrary and your choice of what constitutes "wrong" is arbitrary, again, your results will be randomly distributed.
So what the hell do you do then to try to do better than 50/50 odds? Perhaps filter price action against volume action, fundamental information, or trade some statistical relationship between multiple instruments.
Sorry I don't have the holy grail answer here, but I'm just a retail guy with no "edge" in anything, and have never done better than break even using only price action and TA. I just don't believe trend trading works, unless perhaps you extrapolate to a decades long buy and hold diversified str
I was going to point panzerman in the right direction but then decided not to post this insight on an open forum. What I will say though is that one definition of madness is " Repeatedly doing the same thing whilst expecting a different outcome", particularly if you already know you are doing the wrong thing. After all this discussion is about identifying trends, which are an edge not a strategy.
Cheers John
