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

Simple, HH and HL is an up trend.

LH and LL is a down trend.

Now go make money.

 

Kid, go against one once and you will know.

 

To me, trend = trendiness + direction. Trend is emphermal and most off the shelf statistical techinques are only useful ex post.

Places to start looking to test and measure trendiness are time series methods such as ARMA and Hurst exponent. Even better are certain types of stats that allow you to drop the i.i.d assumption and this can be very useful with tick data.

Trendiness also includes trend quality; i.e, the signal content relative to the noise content. Personally, I spend more time analyzing the noise structure than I do the trend itself.

Direction. Easy to see once it's started but impossible or nearly so to predict at intraday time frames.

-BlueLou

 

my 2 cents...

I think most of people consider as Trend the tendency of data to be on a pattern they believe to see in the data.

Trend is not objective, but mostly subjective.

Simpler patterns tend to be considered more "objective" by people, then more complex ones.

Again the degree of complexity of a pattern may depend on subjective factors and on education.

Whatever trend is, the concept is probably not crucial for trading because even if you see a trend you can conclude in several ways:

- There is a trend: good it will probably continue!
- There is a trend: ah things have gone too long according that pattern, now they are going to change !

and whatever you conclude, the market is always able to find the ways to disprove you )

Anyway trends do have some significance. If a price is going up and you go short, if you eventually lose many people would feel entitled to tell you acted in a stupid way.

On the other end if you went long and the direction reversed after 30 seconds, well it would more difficult to blame you for your decision.

So, trend probably does not exists, but it cannot be ignored !! )


Tommaso

 

"Trend"... the obvious directional tendency and bias of the market... which becomes obvious only after it is too late to capitalize upon it.

 

I could not agree more. It's very simple. People try to make it more complicated.

 

Sometimes its to late and sometimes its not. That's why I use stops.

 

Guppy Moving averages can help you identify a trend

http://www.guppytraders.com/gup329.shtml

 

Interesting, I invented a technical indicator called "trend indicator" last year and about to file a US patent for it.

Stay tuned.

 

If the NVI is above its 1-year moving average, there is a 96% chance the trend is bullish. This applies to the Dow and could possibly be used on other market indexes. There is no high-probability way of determining a bearish trend.

http://www.marketscreen.com/help/atoz/default.asp?hideHF=&Num=85