What is a trend?

[kut2k2]

Recently, after much effort on the part of his critics, marketsurfer finally gave up his definition of trend:

"A series of moves in one direction that can be quantified and exploited as deviating from randomness."

He had previously declared stock trends to be nonexistent. I'll leave it to you to see the connection.

My own recent epiphany is this:

How you define a trend depends a great deal on the context in which your trend occurs.

In the context of financial data, I go with the classic trader's definition:

A trend is EITHER a series of higher highs and higher lows OR a series of lower highs and lower lows.

In the context of coin-flips, I define a trend as EITHER 3 or more heads in a row OR 3 or more tails in a row. Yes, surf, trends can be and in fact often are generated by purely random processes. So your "deviation from randomness" is a nonstarter.

In the context of criminal investigation, a trend is two sufficiently similar crime scenes ("You're a detective now, son. You're not allowed to believe in coincidence anymore." -- Commissioner Gordon)

In all contexts, the definition of trend should be all about "pattern-ness". A trend is first, foremost and always a pattern. Bringing in extraneous factors like exploitableness just muddies the water.

First establish the pattern. Only then should the focus be shifted to how best to exploit it.

 

[llIHeroic]

Your thread reminded me of a little image I made on this topic six months ago. Here is a basic example of what I understand trends to be.

 

[Visaria]

re coin flips: i don't see why 2 heads in a row or two tails in a row is not a trend. Why does it have to be 3?

 

[kut2k2]

re coin flips: i don't see why 2 heads in a row or two tails in a row is not a trend. Why does it have to be 3?

You're free to define your coin-flip trend however you wish. Speaking strictly for myself, there's nothing remarkable about 2 in a row. You get 2 heads in a row or 2 tails in a row 50% of the time.

I'm not a criminal investigator so I am allowed to believe in coincidence, and 2 of a kind in a row can easily be just a coincidence.

 

[Autodidact]

A trend is a one directional move that tends to destroy opposite technical areas upon it's second tests, many times, it's first; it may or may not contain gyrations, also known as retracements.

 

[Handle123]

Since we ALL are forecasting when we are placing a trade, we are all desiring trend will start or continue once we are in that market. We can talk volumes on what we think trend is based on past history, and we came upon realization based on past for most of us, experience of what to do after we get in determines most of the time whether there was any trend.

 

[lawrence-lugar]

a trend is only crystal clear in hindsight -- in a perfect world, the markets everyday would go up or down smoothly...so the trend is very evident. no scary gyrations or cliffs.

 

[Autodidact]

Many of you are showing your inexperience. A trend does not guarantee anything, except increasing the odds of trades in such direction, being successful, nothing else and certainly no guarantees.

If you want to buy, stick to instruments going up.

if you want to short, the opposite.

It's a good start, albeit only a start.

 

[marketsurfer]

You're free to define your coin-flip trend however you wish. Speaking strictly for myself, there's nothing remarkable about 2 in a row. You get 2 heads in a row or 2 tails in a row 50% of the time.

I'm not a criminal investigator so I am allowed to believe in coincidence, and 2 of a kind in a row can easily be just a coincidence.

Good thread, thank you. multiple heads in a row can be a coincidence--- see Jeff Watson's post in the niederhoffer asks what is a trader thread.

Trends only matter AFTER YOU ENTER. trends are personal to the trader-- the trend of your equity is a very real trend. BUT it can only be seen in hindsight.

I maintain that trends that you perceive on a chart have no relevance whatsover to the future price of the instrument. I am yet to see evidence to the contrary beside anecdotal and fanciful claims.

surf

 

[marketsurfer]

Since we ALL are forecasting when we are placing a trade, we are all desiring trend will start or continue once we are in that market. We can talk volumes on what we think trend is based on past history, and we came upon realization based on past for most of us, experience of what to do after we get in determines most of the time whether there was any trend.

Yes, exactly.