Trading with the trend

[pavilion103]

I often read a lot about trading with the trend and I have a couple of questions:

1. What constitutes a change of trend (say, from downtrend to uptrend). I know this may be a little subjective. But what do people use? a higher bottom? a percentage movement from the bottom? accumulation in the background?

2. Do people trade with trend filters? For example, only shorts while the ALL ORDS is in a downtrend as it is at the moment? Or only a certain percentage of longs allowed?

 

[Billyb]

I often read a lot about trading with the trend and I have a couple of questions:

1. What constitutes a change of trend (say, from downtrend to uptrend). I know this may be a little subjective. But what do people use? a higher bottom? a percentage movement from the bottom? accumulation in the background?

2. Do people trade with trend filters? For example, only shorts while the ALL ORDS is in a downtrend as it is at the moment? Or only a certain percentage of longs allowed?

1. Most of the pro trend traders Eg Ed Seykota, Bill Dunn etc would probably say a similar thing. They don't know where the trends gonna go, there is no way to tell, so the only option is to try them all. This is pretty much what trend traders do, just jump on every ride, most of them will run out of fuel quickly, but there'll be a few each year that run on rocket fuel - and those are the ones that make the money. So to answer your question, I don't think it's possible to tell when the trend will change.

2. I think its a good idea

 

[tech/a]

How do you profit without being in a trend?
Even an Arb trade needs to revert either up or down to the equilibrium.
It will have to move in a direction----trend.

In any longterm trend there is counter trends
An alteration to a trend maybe valid in one timeframe and not in another.
Counter trends often move in the opposite direction to the primary trend.

So firstly identify timeframe.
As for change of trend the best thing I've found is a trendline
But without timeframe you'll be at odds with which trend line to use.

Billyb
Is infact very right
You don't know which trend is going to go and for how long.
We see setups trend or counter trend as opportunities so we put ourselves in a position where we are on a trade and if it goes in our direction we profit.
If we are good traders we will be on many of these move our stops to B/E as soon as we can and ride those we catch as long as we can.
Being wrong becomes a good thing as we can set ourselves up on the next opportunity.

 

[Wysiwyg]

I find it incredible that some stocks are banging up higher in this market. Some multi baggers. Vigorous buying while most stocks sell off.

 

[Gringotts Bank]

I find it incredible that some stocks are banging up higher in this market. Some multi baggers. Vigorous buying while most stocks sell off.

Yeh it's a bit different isn't it? A lot of them under 10c too.

I think this has a lot to do with a guy called Fibonarchery on HC, with his shell plays. Very influential. 99.99% of these co's will never be worth anything, and yet with enough players, things move.

 

[tech/a]

Yeh it's a bit different isn't it? A lot of them under 10c too.

I think this has a lot to do with a guy called Fibonarchery on HC, with his shell plays. Very influential. 99.99% of these co's will never be worth anything, and yet with enough players, things move.

That's it!
The new Renee Rivkin
Brilliant.

 

[11bblandin]

First I think you'd need to identify the time frame you'd want to look at. Then in that time frame find a way to describe what the market has done/ is doing, either by looking at highs/lows in that period, or through an indicator that describes where the current price is relative to the prices in that period, or by some other means (?). Ideally this time frame would be longer than the holding length of your trades (unless you mean to capture the entire trend move).

 

[shulink]

You can use weekly chart to find trending stocks, and then use daily charts for entry points. It also depends on how long are you planning to hold the stocks. If you are a swing trader, you can use daily chart to find trending charts, and intraday chart for trade setups.

 

[Wysiwyg]

Trading high volatility is perfectly acceptable, given the volatility has consequentially resulted in a comparatively strong trend.

That should have "perfectly acceptable" for me. A trading fact based on experience it is not.

 

[Trendnomics]

That should have "perfectly acceptable" for me. A trading fact based on experience it is not.

I can back this up with empirical evidence - see my system's thread for back-test results. I purposefully seek out higher volatility, given there is sufficient liquidity to support my large positions.

 

[Wysiwyg]

Trend following win rates over time are consistent. That is something that is factual and something to feel confident about when those losers start mounting.

Answer: Good morning, Bob. Depending on the type of swing trading one does, a 40-60% win rate (batting average) is normal. A longer-term holding style may result in a 40% win rate, while shorter-term swings may come in well above 50%. For what we do, an overall win rate of 45-50% is about right. From quarter to quarter, this number jumps around because we are trend traders. When we are right with the trend and our timing, the win rate will jump well above 60%. If we are off in our timing by a little, the win rate will suffer and sometimes dip below 40%. However, the average percentage of winning trades to losing trades (win rate) may be much less important than many new traders realize. For our strategy, what matters more is the size of the average winning trade compared to the average losing trade.

 

[Newt]

Trend trading is definitely a proven way of trading over the long term. Brett Penfolds ("The Universal Principles of Successful Trading") does a great job of outlining what people should expect however. IIRC he says something like "trend trading is miserable". % win around 40-50% means you're constantly trying stocks to not miss out on those that continue to rise. Not so hard while things are going well, but you're generally in drawdown and only sometimes cashing in a low percentage of bigger winners.

Howard Brandy and many others have commented on the risk in holding positions open over the medium to longer term.

Damned Holy Grail! Its got be around here somewhere dammit!

 

[ryan11]

Trading with the trend means Momentum Trading where traders hold a position for few minutes or couple of hours depending upon how quickly stock moves. How do we figure out trend ? Traders use different measures to figure out trend
• Focus on resistance, support or breakouts over a chart
• You can use technical indicators like ADR, Fibonacci or ATR
• A major News/ Economic event
All these can help you in finding out trend as well earning profits through Day trading.

 

[minwa]

• You can use technical indicators like ADR, Fibonacci or ATR

How does any of those indicators help you figure out the trend ??

 

[pettlepop]

The trend is your friend when its about reverse. TAKE A LOOK AT DCL she is ready to break its downward trend with a massive pop upwards!

 

[Wysiwyg]

Incredible number of stocks trending up. After the quick buck chasing novelty has blown up several times and the search for an edge has been exhausted, one eventually comes around to the time proven EOD trend following. It can be slow, it can be boring but after a year if your account hasn't doubled you're not doing it right.

 

[Roller_1]

Is that a serious statement or?

 

[tech/a]

Is that a serious statement or?

For GB its a very serious statement.

I don't care how you trade
(Arb accepted)
You cant make a profit long or short without a trend

Understanding how to trade and make a profit isn't a certainty
even if you trade trends.

Many never "get it"

 

[systematic]

100k to 100M in 10 years, baby!

 

[Roller_1]

For GB its a very serious statement.

I don't care how you trade
(Arb accepted)
You cant make a profit long or short without a trend

Understanding how to trade and make a profit isn't a certainty
even if you trade trends.

Many never "get it"

GB?

I wouldn't find doubling my account boring lol