Moving Average

[nathanblack]

Other than Arbitrage,Id be really interested in even one other way to profit from the markets which doesnt involve a trend.
A move in price in either direction at any point of time is a trend in that direction.

We analyse and take trades IN ANTICIPATION of a move in our direction.
Not prediction---as those who have little knowledge of T/A presume.

i would have thought a trend requires past reference points. to have just one price(last traded price) u cant gain any trend information. to have 2points, the last traded and the price before that doesnt really provide a trend, it just telss us wether the price has gone up or down BUT doesnt create a trend.

trends definately occur over time and the longer the period used, the more accurate or reliable a trend is?

thats not to say you cant use the last 1hours prices to form a trend for that hour and then use that to ANTICIPATE future prices in coming hours.

 

[fapturbo]

i would have thought a trend requires past reference points. to have just one price(last traded price) u cant gain any trend information. to have 2points, the last traded and the price before that doesnt really provide a trend, it just telss us wether the price has gone up or down BUT doesnt create a trend.

trends definately occur over time and the longer the period used, the more accurate or reliable a trend is?

thats not to say you cant use the last 1hours prices to form a trend for that hour and then use that to ANTICIPATE future prices in coming hours.

Taking the value of the 200 day moving average and comparing that to the value of the 200 day moving average 50 days ago gives a good filter.

 

[bunyip]

Trend traders......

Let's not try too hard to convince people who speak out against trend trading!
I say long live traders who can't see the benefits of trading with the trend! Their counter-trend trading creates the chart patterns and entry setups that enable us 'with the trend' traders to climb aboard the big moves that make the big profits.

 

[tech/a]

i would have thought a trend requires past reference points. to have just one price(last traded price) u cant gain any trend information. to have 2points, the last traded and the price before that doesn't really provide a trend, it just tells us whether the price has gone up or down BUT doesn't create a trend.

trends definitely occur over time and the longer the period used, the more accurate or reliable a trend is?

that's not to say you cant use the last 1hours prices to form a trend for that hour and then use that to ANTICIPATE future prices in coming hours.

I can trade a single EOD bar all day with a 10 min chart and trade a trend on that 10 min chart just like and EOD chart. I can and do enter on pull backs set stops at support and sells at resistance.I can trade the same "trend" 5 times in a day ---yet the EOD bar looks innocuous.

Trend traders......

Let's not try too hard to convince people who speak out against trend trading!
I say long live traders who can't see the benefits of trading with the trend! Their counter-trend trading creates the chart patterns and entry setups that enable us 'with the trend' traders to climb aboard the big moves that make the big profits.

Seriously do you honestly think that if you've taken a counter trend trade you'll NOT be trading a trend if profitable and be stopped out by a trend if not.
Think about it---I don't care what "Type" of trading you think your using you cant make a profit unless price moves in your direction.
A trend can be a single tick bar higher than the last.
Scalpers anticipate these small "trends" all the time

 

[bunyip]

Seriously do you honestly think that if you've taken a counter trend trade you'll NOT be trading a trend if profitable and be stopped out by a trend if not.
Think about it---I don't care what "Type" of trading you think your using you cant make a profit unless price moves in your direction.
A trend can be a single tick bar higher than the last.
Scalpers anticipate these small "trends" all the time

What I 'honestly think', Tech, (and I thought my post made that patently obvious) is that trading with the trend gives you the best possible chance of capturing the most profitable moves.
I'm sure you've read enough of my posts on this forum to know that I'm a trend trader who enters from pullbacks within the trend.

A trend is a trend in the timeframe you're following. If you have two timeframes trending in the same direction, say a daily and a weekly, or a one hour and a ten minute, and you trade from the shorter timeframe of the two, then you're chances of making money from a 'with the trend' trade are even better.
But whichever way you do it, you enhance your overall profitability by trading in the same direction that the market is, by your definition, trending.

 

[fapturbo]

What I 'honestly think', Tech, (and I thought my post made that patently obvious) is that trading with the trend gives you the best possible chance of capturing the most profitable moves.
I'm sure you've read enough of my posts on this forum to know that I'm a trend trader who enters from pullbacks within the trend.

A trend is a trend in the timeframe you're following. If you have two timeframes trending in the same direction, say a daily and a weekly, or a one hour and a ten minute, and you trade from the shorter timeframe of the two, then you're chances of making money from a 'with the trend' trade are even better.
But whichever way you do it, you enhance your overall profitability by trading in the same direction that the market is, by your definition, trending.

Can I ask you something about entries mate??

How do you determine what is a pull back??

Where do you set your SL and how do you follow the Trend??

 

[bunyip]

Can I ask you something about entries mate??

How do you determine what is a pull back??

Where do you set your SL and how do you follow the Trend??

If the trend in my timeframe is up by my definition, one bar with a lower top than the top of the previous bar, and a lower bottom than the bottom of the previous bar, constitutes a pullback.
I like to see pullbacks that are comprised of more than one bar. But even one bar is sufficient if it's a bottom reversal candle or it takes out the low of the last two bars.

I put my stop under the low of the pullback.

I trail the stop stop under each higher trough in the trend. I also have a couple of other criteria which, if met, will cause me to tighten the stop.

 

[fapturbo]

If the trend in my timeframe is up by my definition, one bar with a lower top than the top of the previous bar, and a lower bottom than the bottom of the previous bar, constitutes a pullback.
I like to see pullbacks that are comprised of more than one bar. But even one bar is sufficient if it's a bottom reversal candle or it takes out the low of the last two bars.

I put my stop under the low of the pullback.

I trail the stop stop under each higher trough in the trend. I also have a couple of other criteria which, if met, will cause me to tighten the stop.

What determines the end of a pull back??

How many bars does it take that make a higher high and a higher low before you consider the pullback finished? One bar? Two bars with consecutive higher highs and lows?

Do you trade the next bar after the close of the bar that has a higher high and low for example?

 

[Mr J]

Brad.

A trend is a trend.
Without a trend in the direction of your trading you wont profit.

The trend is a strong bias to overcome.

trends definately occur over time and the longer the period used, the more accurate or reliable a trend is?

I don't think it is more reliable. Trends must be considered within their time-frame, so a shorterm trend is just that.

What determines the end of a pull back??

I don't think there is a practical answer. My opinion is that the end is determined by a significant move in the opposite direction, and therefore it's only something we can know after the fact. It seems you want specifics, but I don't think they can be given, and I think that is where "art" comes into trading.

 

[fapturbo]

It seems you want specifics, but I don't think they can be given, and I think that is where "art" comes into trading.

I don't know about it being an "art"

I think trading needs to be mechanical with a proven method. It's the only way otherwise you are just gambling.

 

[bunyip]

What determines the end of a pull back??

How many bars does it take that make a higher high and a higher low before you consider the pullback finished? One bar? Two bars with consecutive higher highs and lows?

Do you trade the next bar after the close of the bar that has a higher high and low for example?

The market itself determines the end of a pullback.
But I think you're wanting me to be more specific by naming the criteria that tell me a pullback is finished and the trend has resumed, and it's now time to enter the trade.
I don't work like that. I place my buy order above the last bar while the pullback is still in progress, my aim being to get in as early as possible as the trend resumes.
I first read of this strategy about ten years ago in Elder's Triple Screen Trading System. I tried it and it worked, so I've been using it ever since.
The trend resumption bar can be quite a powerful move and I want to get in near the start of that bar, rather than miss out on that move and get in on the next bar.
That's an aggressive entry but has the benefit of catching the blast off as the trend resumes via a bullish bar.
A more conservative entry would be to buy above the first decisively bullish bar after the pullback. While this is a viable entry strategy, its disadvantage is that you miss the entire move of this bullish trend resumption bar.

For a middle of the road appraoch that's half way between aggressive and conservative, you can put your buy order above the second last bar of the pullback, rather than above the last bar.

 

[Frank D]

You don’t need a trend to make money, as most swing traders who use
limit entries are taking positions anticipating a change of trend.

That doesn’t mean that they have taken the trade based on a trend.

A recent example.

Over the past 9 weeks the DOW has hit the 5-day highs 14 times.

That means that the daily trend has to be rising upwards into higher
points.

8 of those 14 times or 57%, price has reversed back into the 5-day 50%
level the same day or the next day.

To say “ without a trend in the direction of your trading you won’t profit” is simply ignorant of other pattern recognition methods.

 

[tech/a]

To say “ without a trend in the direction of your trading you won’t profit” is simply ignorant of other pattern recognition methods.

Rubbish.

To profit regardless of which method you use including the Dilernia method---you need price to move from a low point to a higher point if long ---or from a high point to a lower point if short and remain above/below your entry at the time of exit.

Even a 1 tick move in your direction is a trend in that direction at/in that point in time.

Now on the point of Ignorance.
Could you point me to my "ignorance of "Other" pattern recognition methods"
For the life of me I cant see any relevance in that rather stupid comment --with regard to the topic-- being trends to make money.

Wakey wakey Frank its not an attack on methodology!
For such a deep thinker you've dived into the shallow end this morning.

 

[Frank D]

Tech/a

It is obvious that to profit it has to move in my direction, I’ve already
stated that, but doesn’t mean I’m taking the trade when the trend is
moving in my direction if I have placed a limit entry to go short at a
5-day high.

The trade has to be rising upwards and I’m shorting a rising tick, not a
falling tick.

You are trying to justify an obvious argument using a 1 tick trend as
an example, when a limit entry is not waiting for any 1 tick move.

Your serve.

 

[tech/a]

You are trying to justify an obvious argument using a 1 tick trend as
an example, when a limit entry is not waiting for any 1 tick move.

No not at all.

You place your limit order in anticipation of a TREND change.
One of 2 things will happen.
The trend will change and you'll sell at a price which ensures profit.
Or it doesnt change and you either take a stop and lose some $$s or hold the position and still lose some $$s

Muted arguement.

I'll see you up the deep end.

 

[beamstas]

But wouldn't you say that you can still profit against the trend?
I guess the question really boils down to "how long is a trend"

Or in other words

"How long is a piece of string?"

Can trends be cut into fractals? A large trend is made up of smaller trends each going their own seperate ways?

Or how long does the price have to move before it becomes a trend? Can a trend follow say he is following a trend off of 1 tick?

Is all trading swing trading? Anticipating a trend?
Or is it all trend following? Waiting for a trend to develop? How long do you need to wait?
Can you profit against the trend at all?

There are alot of open questions that can be answered by different people in different ways.

Here is a picture of how i imagine profiting against a "trend" could happen. But then are you just profiting off a smaller trend that is part of a larger trend?

 

[Chorlton]

Here is a picture of how i imagine profiting against a "trend" could happen. But then are you just profiting off a smaller trend that is part of a larger trend?

Agreed!!!! I believe that this is the point Tech is making.... Depends on what timeframe was is looking at......

 

[julius]

Rubbish.

Even a 1 tick move in your direction is a trend in that direction at/in that point in time.

You can't have a one-tick trend!

Price action is made up of a trend component + cyclical component + noise.

The trend component is an underlying, persistent bias to the direction of the price action.

What's the difference between a trend and random noise if a single up tick is classed as a trend? This implies that there is no noise in the markets!

 

[bunyip]

But wouldn't you say that you can still profit against the trend?
I guess the question really boils down to "how long is a trend"

Or in other words

"How long is a piece of string?"

Can trends be cut into fractals? A large trend is made up of smaller trends each going their own seperate ways?

Or how long does the price have to move before it becomes a trend? Can a trend follow say he is following a trend off of 1 tick?


Is all trading swing trading? Anticipating a trend?
Or is it all trend following? Waiting for a trend to develop? How long do you need to wait?
Can you profit against the trend at all?

There are alot of open questions that can be answered by different people in different ways.

Here is a picture of how i imagine profiting against a "trend" could happen. But then are you just profiting off a smaller trend that is part of a larger trend?

If the trend is decisively up, those small moves against the trend are simply countertrend moves within that timeframe. They may well qualify as 'trends' if you change to a different timeframe, but when they occur within that timeframe you're looking at while the overall market direction is up, they're simply pullbacks in that timeframe, not trends.
That's how I see it anyway, and I won't waste my time arguing with anyone who sees it differently.
Yes you can trade these retracements, but due to their short duration and small percentage moves, you'd want to be fleet-footed to get in and get out with a profit after paying brokerage and allowing for slippage etc.
All three of the examples you've given would have been losing trades if you'd gone short on the bars you've marked with green arrows.

I'm not saying it can't be done, I'm saying it's difficult to do and why would you bother - if the overall trend is decisively upward, then it's far easier and more profitable to trade in that direction than against it.

 

[beamstas]

I'm saying it's difficult to do and why would you bother - if the overall trend is decisively upward, then it's far easier and more profitable to trade in that direction than against it.

Exactly
Can't argue with that
Much prefer to take 1 long on that chart than 3 shorts!