Moving Average

[tech/a]

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!

Why not?
Buy at $1.00 sell at $1.01
or SPI is 4011 sell 4012---50 contracts.
I'm bullish and I'm anticipating a trend up.

There is trending in noise.

 

[Frank D]

Tech/a

You haven’t demonstrated any statistical probability that the tick
would move up.

So what’s your expectancy, what’s your stop?

In fact you’ve just been stopped out because it’s moved down to 4010.

Oh it’s hypothetical.

Now I know why you don’t scalp the SPI, because in the real world it’s not always black and white, There is a lot of grey

Black + White = Trend

Grey:- Entry + Exit + Stop = expectancy = Profits....

or in your case = Loss

come and swim in the warm spot

 

[Timmy]

Noise, huh? I'm off to tell every scalper in the world that they don't actually make any money, I may need a mouthguard.

 

[nunthewiser]

come and swim in the warm spot

i like that

 

[beamstas]

Noise, huh? I'm off to tell every scalper in the world that they don't actually make any money, I may need a mouthguard.

Just blast em

 

[motorway]

Why not?
Buy at $1.00 sell at $1.01
or SPI is 4011 sell 4012---50 contracts.
I'm bullish and I'm anticipating a trend up.

There is trending in noise.

Think of a series of tosses of a biased coin

or the outcome on a series of bets on a roulette wheel at a casino


There is one trend in operation
regardless of runs for or against you

A trend is a tendency for something to move in a certain direction

No Tendency no TREND

So there might be a trend at a tick level or there might not
there might be a trend at a larger scale or there might not..

If there is a tendency there is trend

Movement itself is not a trend

a moving average is a very coarse
linear filter .

Filtration reveals trends ---->True

but moving average is at the bottom of the scale of what is optimal
and will tend to suggest more trends when none exist
eg a series of tosses with a fair coin

That is why non linear filtering ( how ever you want to do it )
is superior... here we are not even considering that trend cycle & noise (per julius ) are aperiodic, when you do, non linear becomes mandatory..


motorway

 

[Frank D]

This is my last post on this thread.

Everyone knows that you need a trend to make money. I’m not going
to dispute that.

The best money made is always and has always been ride the trend as
long as possible. I’m certainly not going to dispute that.

But using a 1 tick move in the market to describe a trend is just plain
silly.

A move that goes from 4101-4102-4103-4102-4103,4102,4101, isn’t a
trend

Ask any short term ‘scalper’ trading any those prices by entering and exiting
3 point moves in the market certainly won’t use the term or call
themselves a ‘trend trader’.

that's why we call it a 'tick' and not a trend.

So let’s all agree.

To make money in the market you need a trend,
but drop the 1 tick move to justify a trend, as it makes no sense in real
time trading.

 

[AlterEgo]

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.

Hi Bunyip,

As per your diagram, I understand that you would place your initial stop-loss just under bar 3 – is that correct? What would you do if bar 4 turns out to be a bearish candle like bar 2 (ie. moves up triggering your entry, then heads down closing below your entry price)? Do you exit immediately, or wait to see if the initial stop gets hit?

thanks

 

[fapturbo]

Hi Bunyip,

As per your diagram, I understand that you would place your initial stop-loss just under bar 3 – is that correct? What would you do if bar 4 turns out to be a bearish candle like bar 2 (ie. moves up triggering your entry, then heads down closing below your entry price)? Do you exit immediately, or wait to see if the initial stop gets hit?

thanks

Yes i was wondering this also.

Also one other thing. I get the entry using the highs of the canldes with limit buy orders.

Do you filter stock based on "Trend"

If so can you please describe how you determine if the "Trend" is trade worthy?

 

[tech/a]

To me a move in any direction is a trend.
To others it doesnt qualify as a trend definition.

Frank I'm keeping out of the warm end I dont like the colour of the water.

 

[Tradesurfer]

I went away for a little bit and missed a lot of posts.

I will say though that there could be an uptrend, downtrend, sideways trend(defined one), or just a mess. 3 of the four states of the market so to speak allow entries and exits using defined points.

With regard to the talk around pullbacks within a trend? The key is if you are trading daily price charts and you get a pullback to the trendline, those are potential areas to JOIN an ongoing trend and generally one might place their stop below that uptrending line(not directly on it but a little below) that chartists draw under the series of higher lows.

Now if you were looking at a 1 minute chart, then you might have seen a downtrend filling your screen so as someone else mentioned its important to focus on the time frame that you trade while knowing what the primary trends are in whatever market or stocks you are trading.

But to my earlier comment about really 4 states of the market, a sideways trend is a trend in my opinion which lends itself to other tactics such as slow stocastics overbought/oversold or entering on price pivots of the lower defining line and setting targets at the top of the range. But it is a trend.

I've also seen a lot of good comments with regards to exits. Really, a trade should never be taken unless there is a strategy to keep losses small. The proverbial line in the sand where one knows they are wrong and can get out.

With regard to scalping, same thing. Many traders might short at an intraday resistance high hoping to fade a move a couple points lower or vice versa. Traders can use a 1 minute bar and set a stop below the previous low etc etc. The challenge though with scalping is that since your winners may not be much greater than your losses, your winning percentage has to be much higher to remain profitable and your entries have to really be good. But I do plenting of this as well when I have the time.

this is a really good topic though and deserves the discussion.

 

[fapturbo]

To me a move in any direction is a trend.
To others it doesnt qualify as a trend definition.

Frank I'm keeping out of the warm end I dont like the colour of the water.

That's my point what is a tradeable trend.

I dont think two consecutive bars constitutes a trend.

As you have mentioned Time Frames is important.

However if trading End of Day canldes there's no point talking about up tick and down tick.

What determines if a trend is worthy of trading??

 

[tech/a]

To make money in the market you need a trend,
but drop the 1 tick move to justify a trend, as it makes no sense in real
time trading.

Just before I get out of the pool.
I would have thought that there could well be some Bots which could be designed (or already may be out there) for futures which could be profitable from high % winning one tick trades X so many contracts.

I dont know that its all that far fetched.

 

[beamstas]

One tick.. can it be a trend?

Example (on a tick chart)

5000
4999
4998
4997
4996
4995
4996
4995
4994
4993
4992
4991
4990

Personally, i'd say the trend is down, but then it comes back to the question i asked before "How long is a trend", Or as FapTurbo has said when is a trend worth trading?

If we use the definition

"•The general direction, either upward or downward, in which prices have been moving."
www.cftc.gov/educationcenter/glossary/glossary_t.html

Then that 1 tick can't be a trend, it is a counter trend move, as the general direction of the price movement is down.

But then if that chart was a monthly chart, there could be 20 up days within that 1 bar, so then it could be a trend for that one month, but the monthly trend is down.

 

[fapturbo]

One tick.. can it be a trend?

Example (on a tick chart)

5000
4999
4998
4997
4996
4995
4996
4995
4994
4993
4992
4991
4990

Personally, i'd say the trend is down, but then it comes back to the question i asked before "How long is a trend", Or as FapTurbo has said when is a trend worth trading?

If we use the definition

"•The general direction, either upward or downward, in which prices have been moving."
www.cftc.gov/educationcenter/glossary/glossary_t.html

Then that 1 tick can't be a trend, it is a counter trend move, as the general direction of the price movement is down.

But then if that chart was a monthly chart, there could be 20 up days within that 1 bar, so then it could be a trend for that one month, but the monthly trend is down.

Before choosing a trending stock to enter what determines if the trend is worthy of trading. What makes xyz stock better than abc stock.

 

[bunyip]

This is my last post on this thread.

Everyone knows that you need a trend to make money. I’m not going
to dispute that.

The best money made is always and has always been ride the trend as
long as possible. I’m certainly not going to dispute that.

Not quite everyone knows it Frank. Over my years on this forum I've had a couple of arguments with amateurs who speak against trading with the trend, and claim they're doing well as counter-trend traders.
A couple of others have shown such a lack of understanding of trends that they don't seem to know if they're trading with the trend or against it.

I don't argue with them any more - now I just regard them with amusement.
If someone can't see that swimming with the current is easier and more profitable than swimming against it, then I can no longer be bothered trying to convince them otherwise.

 

[fapturbo]

Not quite everyone knows it Frank. Over my years on this forum I've had a couple of arguments with amateurs who speak against trading with the trend, and claim they're doing well as counter-trend traders.
A couple of others have shown such a lack of understanding of trends that they don't seem to know if they're trading with the trend or against it.

I don't argue with them any more - now I just regard them with amusement.
If someone can't see that swimming with the current is easier and more profitable than swimming against it, then I can no longer be bothered trying to convince them otherwise.

Do you have a way of ranking a "trend" ??

 

[tech/a]

Do you have a way of ranking a "trend" ??

Yes.
A strong trend has pullbacks of less than 38%
A good trend 50% or less.
A weak trend >50%

 

[MRC & Co]

Yes.
A strong trend has pullbacks of less than 38%
A good trend 50% or less.
A weak trend >50%

But how does a tick have <50%, >50% or even a 50% retracement?

This thread is deep in the territory of idle semantics, so far I think it made it's way to the warm water.

People won't learn a thing about making money from this chit chat.

Back to moving averages, don't use them. Think simple trend structure would tell you a lot more.

 

[fapturbo]

But how does a tick have <50%, >50% or even a 50% retracement?

This thread is deep in the territory of idle semantics, so far I think it made it's way to the warm water.

People won't learn a thing about making money from this chit chat.

Back to moving averages, don't use them. Think simple trend structure would tell you a lot more.

Moving Averages smooth out Price Movements, they give a very clear way of measuring a Trend. If you want to devise a Mechanical System you need a way of being able to code a "Trend"

Can you tell me of a method to do that??