Ok. So how do you know a trend when you see one? What makes a trend a trend if they indeed exist? In other words, how would you define a trend?
I don’t like trend lines to define momentum. It asks too much for a trend to be defined. Often price break out but not momentum. I think in terms of fractal. Momentum within momentum. It’s impossible to remove uncertainty, But to be one step away from randomness. What matters is successful anticipation of price. There is an element of skill, information, probability. Watch out for biases. Don’t shy away from statistics. An edge isn’t backed up by story telling. Complexity increases the role of luck. Favorite should simplify the game. Turn the odds in your favor, Get a statistical advantage over the house. Remove errors from judgement, Getting fooled, being a sucker is risk #1 Correcting misconceptions is a trader 1st job. Information comes from low probability events. The lower the odds of it happening, the higher its significance. Nothing is certain; nothing is ever due to happen. It’s not because it doesn’t work 60 out of 100 that it’s broken. The true odds are the actual chances of winning, whereas the payout odds are the ratio of payout for each unit bet. In theory nothing is completely random, in practice many games produce events that are indistinguishable from being purely random.
People use various methods: 200 Bar SMA 50 Bar high or low The things with trends and defining when they happen that it most of the times fails. Once you catch a trend it should pay off for the many losses you have encountered before. It might as well be that the Indizes I mentioned before go in a sideways market for a few years with out any clear trend. That is why TrendFollowers like to diversify to different assets classes Oil, Gold, Wheat etc...