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lets define a trend..quantitatively

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kaloian kaloianov
445
kaloian kaloianov 2013.01.15 13:43 

I would like to ask you, how you would define a trend in your opinion? but not with letters but as an ea.


what is more important to you,  the time component(for how long the price has been reaching new highs/lows) or the quantity(for example 300 pips in one day or 3000)???

Steven Theobald
852
Steven Theobald 2013.01.15 19:38  
onlysolo:


I would like to ask you, how you would define a trend in your opinion? but not with letters but as an ea.


what is more important to you,  the time component(for how long the price has been reaching new highs/lows) or the quantity(for example 300 pips in one day or 3000)???



The "trend" is entirely dependent on the trader's time frame or chart type.   When scalping, I often trade off the one minute chart and try to trade within the trend of the 5 min chart.  When swing trading, I may take a trade off the 15 min chart based on the trend of the 1 hour chart.  You can easily see the problem!  Trend definition really is subjective because the markets are fractals, and it appears to be so even down to the micropip/microtick level.  The "big boys" probably completely ignore the 1 min chart and wait for the 4 hour or daily chart to give a signal and then may pop or drop the market as much as 2% in one day.  But let me give you something actually useful.  I have been trading FX manually for 6 years and have determined that the **50 sma** is my favorite trend indicator on ALL time frames.   It is uncanny as a dynamic support/resistance level.  My favorite time frame is the 5 min chart.  So combining the two, I would wait for the 50 sma to roll over on both the 1 and 5 min charts before trying to short.  Even then I would wait for a slight pop to enter.  And remember to never short immediately above a strong support level.  Try it out!  (I am trying to demonstrate on my new TalonTrader live account at https://www.mql5.com/en/signals/3203     After a rough start, I am making some progress.)   -TalonTrader
Rob Cain
600
Rob Cain 2013.01.15 23:13  

A Trend

 

The daily Euro/USD, we had a good few months of trending, are you asking how we could supply,interpret this for a EA to recognize ? good question, as Talon has expressed, there are all forms of trends on different time frames, you would need different criteria for each one, the daily shows a good steady rise with some great spikes, a little bit erratic at the start but conforming as it rises, a trailing stop would have probably been triggered somewhere at the first spike,loosing the best part of the trend, maybe the best place to follow would be the line underneath the whole trend, now this would be a great idea.

In my opinion and looking at the chart, my rules would be to open the trade as  the green bar forms, let the price move on and at sometime move the stop to the price opened and let it run, this way you are trading at no risk, if in this instance we had implemented these rules we would have been sitting pretty, hindsight is a wonderful thing and I can only make these observations after the event.   

khai hoan nguyen
242
khai hoan nguyen 2013.01.16 04:28  

To see trending, I think , we should open many charts with many different timeframe
Steven Theobald
852
Steven Theobald 2013.01.16 22:40  
onlysolo:


I would like to ask you, how you would define a trend in your opinion? but not with letters but as an ea.


what is more important to you,  the time component(for how long the price has been reaching new highs/lows) or the quantity(for example 300 pips in one day or 3000)???



Thought I'd say something else.  95% of traders lose.  And most of them are trying to catch the trend.  HMMMM.    What does that tell you?   The market spends more than 50% of the time in consolidations/range conditions.  And it is at these times that traders get chopped up the most.  So perhaps the better question is "how do I determine range vs. trend conditions?"  and "Can my trading style or EA adapt to both conditions?"  ADX works well for this, but in manual trading, I just keep my eye on the support and resistance levels and momentum, watching for turns.  -TalonTrader
Steven Theobald
852
Steven Theobald 2013.01.17 02:47  
I forgot the most important thing and perhaps the easiest thing (visually) in trend determination.  Whatever time frame(s) you choose to use, remember the classic definition of "higher lows and higher highs" for an uptrend and "lower lows and lower highs" for a downtrend.  So find those turning points (zig zag or fractal indicators or many others can find them for you) and see if they are making new highs or new lows.
Rob Cain
600
Rob Cain 2013.01.17 13:37  

I have posted a few snapshots below of different time frames and how development occurs, with hindsight, Talon has pointed out a classic, note the long green candles and how the price never penetrates the open but continues to break the high.

So now we can go backward to see how this performed on the 1HR chart and would or could we have deduced a trend. 

h

 

Rob Cain
600
Rob Cain 2013.01.17 13:41  

The 1HR chart shows a rise in price but not as straight forward as the 4HR

 


Rob Cain
600
Rob Cain 2013.01.17 13:43  

The 30 min chart, again nothing that stands out other than the rise in price

 

 

Rob Cain
600
Rob Cain 2013.01.17 14:04  

The last chart was going to be the 15min but I could not see the point as there nothing more to see other than the price rising and a little distortment along the way, the point I'm making, maybe to quantify the trend we may have to start with a greatly higher time frame otherwise we can only see chaos on the smaller time frames, in the instances above we are clear there is a trend however this is after the event but strip out the 1&4hr chart, could you deduce a trend that would last ten days, possibly the approach would be from a position management view, as the price moves into profit, you move the stop-loss to the open position, you could aslo reduce the position size as the market "notches" up, just a thought.

This concept of higher time-frames I read about, "bird watching in lion country" no publicity intended, in the book there was a great story of how 3 blind men described what they were touching, it was strange that they were all touching an "elephant" but each one had a different description of what this was, they could only interpret what they thought they could "see", a chart and all information, to each individual is viewed very  differently 

enbo lu
Moderator
1951
enbo lu 2013.01.17 16:09  
never define,but follow.
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