To estimate the trading in the near past a regression channel could be used. Depending on the slope of the channel even the degree can be numerized.

Predicting the market, well, should not be that easy. If there is a common known way i think we would not have this discussion. You can assume that the market will start trending in the near future when you are into a ranging phase. (But as current eurusd shows, this ranging period can be extended). From my point of view it all comes down to the quality of your entry/exit signal.

If you belive there is an underlying formula/system/patterns in the market then neural nets or statistics might be the best way to "predict" the market.

All trading (except when based on external information) relies (consciously or not) on inferences about the statistical properties of the market in the future from statistical properties of the market in the past. It seems useful to look at statistics more general than the results of a particular trading system (which seems by far the most common statistical analysis undertaken by traders).

One key property of the market is whether it is trending. (Of course this is a loose term that can be defined in many different but related way). Traders often talk about taking into account whether a market is trading in making trading decisions. They are mainly interested in whether the market will be trading in the future, over a time scale similar to a trade they might make. But the information they have is about the market's past, say that it has been trending over a certain period.

My question is whether anyone else here has done analysis that determines how well they can predict whether the market will trend over a chosen period of the future, using information from the past? Eg if the market is trending over period A in the past, it is more likely to trend over period B in the future. Note that completely random, untradable markets exhibit apparent trends (probably almost as much as real markets), so this comparison will be the benchmark for prediction.

If it is possible to show that it is possible to predict (to a useful degree) whether the market will trend (as one would hope and expect), it would be useful as a component of trading systems. In fact a lot of trading systems use such a condition already, whether or not it is known how reliable it is.

A key aspect of this concept is that it is not directional. Of course all normal trading is really about predicting directions. However, if one knows a market is trending but not even any information about the direction, it may be possible to make a profit by using an appropriate exit strategy. Most of the time there are reasons to have some belief about the direction of the market as well, which will make things better.

To make this quantitative requires answering some questions. How would you define quantitatively whether a market is trending on a particular scale (or to what degree it is trending)? What methods are suitable for predicting whether a market will trend over a period in the future, according to this chosen definition (and can be shown statistically to be so)?

Anyone else interested in these issues, or this sort of general statistical analysis of markets?