A simple but not easy question -- What is trend?

Discussion in 'Technical Analysis' started by mythseason, Oct 17, 2008.

  1. What is trend, don't think it is so simple that just ignore it, please elaborate your idea, since before you follow the trend, you have to find and identify it first.
    Thank you~~~~
  2. rickf


    If you can convince yourself the price is going up or down for a prolonged period of time, there's your trend. What you see is a trend may not be what I see as a trend - I argue this with a good friend all the time. To him, a 10-15 point ES move isn't a trend, because he's looking at a 1-day chart. On a 1,3,5m chart or tick chart, that 10-15 move might well be the one trend you want or need to be profitable for the day.

    The answer is, quite simply, "it depends" on what YOU think you're seeing on your chart.

    I've made good profits being short while the market was on the day trending up, because I used a smaller timeframe. You can have a short-term trend that's down inside a longer-term trend that's up. So the question you ask in and of itself leaves a lot of open room for interpretation.
  3. "Trend" is a slang term. Each trader likely defines trend in his or her own way.

    You might try writing trading rules on a sheet of paper without using the word "trend". For example, "if price value is greater than the price value 10 days earlier then buy." "If price value is less than the price value 10 days earlier then sell."

    There are lots of ways to define a trend.
  4. This is an important question. Michael Harris in his new book 'Profitability and Systematic Trading' deals with this issue and the answer he gives is that it depends on your time horizon. He also provides an example of lines that meet the definition of a trendline but on a Dow chart, one still indicates an uptrend and the other is broken to the downside.

    But the most important conclusion from a quantitative analysis of the subject in the same book I mentioned above is that it is very difficult to design trend following systems in any time frame, not because trends are difficult to identify but because the trader has little control over the avg win to avg loss ratio due to the random nature of the trends. Michael Harris concludes that in effect a much higher success rate may be required which is difficult to obtain given the choppy markets in-between trends.

    IMO forget about trends and learn intraday and position trading techniques. Leave the trends for Soros...
  5. Tums


    <img src=http://elitetrader.com/vb/attachment.php?s=&postid=2129207>
  6. From your words, ripples are not part of trends, a 5 min trend may be a ripple of 60 min trend. Yes, that comes to the second most important question, how to define ripples rather than trends.
  7. what you are saying is any two points in any time frame on the chart can represent a trend?
  8. If you are looking for a concrete example of a formal definition of trend, look up the Turtles work (PDF floating around somewhere). There are many others, Turtles is a useful place to start because pretty much everyone knows what you're talking about.

    If what you're actually asking for is a universally-accepted definition of "trend" - there is no such beast.
  9. Nice link. Really like this quote:

    #10     Oct 17, 2008