What you think is a dip now, can appear to be an almost top 30 minutes later. If it would be so clear what is high and low, we would all be millionaires.
Some ways to define a Trend.
- Thread starter dartmus
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What you think is a dip now, can appear to be an almost top 30 minutes later. If it would be so clear what is high and low, we would all be millionaires.
Trying to find a trend is very difficult.
- What do you call a trend? A move of 2 ticks, a move of 5 ticks, a move of 5 points....?
- How can you define that your trend has enough potential to make a profit? Will the trend continue 2 ticks, 5 ticks, 5 points....?
- How can you define the strength of this trend? Because there is not a universal, standard trend.
- How do you eliminate noise to see the trend and only the trend clearly?
- Where to enter and exit?
- Where to put stops?
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Impossible to measure the true probability of continuing, which is close to 50/50. You define the trend how you want, and either enter on weakness counter to the trend, or ride the momentum in the direction of the trend, using risk and money management in your strategy.
Remember the whole concept of trend could just be Gambler's Fallacy if you at all believe in a random walk model of the markets.
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Thanks, I am.
Most would call 2 ticks noise;
not really a practical or profitable trend for long or short because slippage happens.
Thats also how you eliminate noise;
trends average much longer, clearly.
Commoddities can trend better/longer than stocks;
200 day moving average helps for profits.Not a prediction, not is a 200dma as exciting as a 5 minute noise chart
I don't agree.
It is possible to increase the probability from 50/50 to much more favorable proportions. You can develop a system in such a way that you don't have to rely on risk and money management alone. You should learn to understand why sometimes trends are very strong and sometimes very weak. If you can take 60-75% of every move, no matter how strong the trend is, then you have a good system. System should be self adaptive accordingly to the strength of the trend. If the trend moves 25 points you should take more profit then if the move is only 5 points. But not based on a MA because MA's are not efficient enough, they have too much lag.
These are 2 examples:
The trend for these signals is defined on HOURLY bar charts, so no need to load tons of tickdata. The charts are in 5 min format because hourly would not be so clear.
- Day 1 was 1 big move. Your system should stay long as long as there is long potential.
- Day 2 was a day with a reversal. Your system should take first the short and after that the long. And if possible each time the max of points you can take. But it should be a real system, not gamble, there should be real rules why you do what.
- If you can take these moves it is clear that the probablity is not 50/50.
The trend for these signals is defined on HOURLY bar charts, so no need to load tons of tickdata. The charts are in 5 min format because hourly would not be so clear.
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The best way without drawing lines to define a trend is using for up trend HH and HL and down trend LL and LH.
When talking about a trend, remember you are talking about a specific timeframe. A bearish trend on a weekly chart, when consolidating, if a bullish trend on the H4.
In order to know where a trend may end/start or even consolidate, you need to have a look at higher Tfs. Spot places of support and resistance on those charts :this is where the trend may change on your trading chart. Exemple:
This is AJ daily. Clean bearish trend, clean bearish BO, and then a dragonfly doji out of nowhere.
Of nowhere? Not really. Take a look at the Weekly Tf.
On the weekly the pair is rejecting the 200 SMA. And by the way it is rather an uptrend !
This is just an exemple how you may anticipate trend's turning points /consolidation by using higher Tfs,
Trade safe !
In order to know where a trend may end/start or even consolidate, you need to have a look at higher Tfs. Spot places of support and resistance on those charts :this is where the trend may change on your trading chart. Exemple:
This is AJ daily. Clean bearish trend, clean bearish BO, and then a dragonfly doji out of nowhere.
Of nowhere? Not really. Take a look at the Weekly Tf.
On the weekly the pair is rejecting the 200 SMA. And by the way it is rather an uptrend !
This is just an exemple how you may anticipate trend's turning points /consolidation by using higher Tfs,
Trade safe !
very good points, it pays to improve your understanding of price action and who's doing what regarding the buying and selling