Determining the trend

Discussion in 'Trading' started by vingbel, Sep 15, 2008.

  1. vingbel


    I started this thread to formalize the various ways daytraders determine the trend.

    Many of the methods described in ET start with determining the trend. Many also correctly advise to start with a higher time frame and trade within a lower timeframe.

    1) So what are the highest time frames you use to determine your entries as daytrader? Multiyear to year to month to week to day to hour to minute?

    2) And how many of your S/R lines and HH and HL (or vice-versa) on your chosen daytrading chart are carried over from your multiple larger time-frame charts?
  2. Trading the ES, I use a 7.5 point range bar to determine the trend.

    If the Close of the previous bar is higher than the Open the trend is up.

    If the Close of the previous bar is lower than the Open the trend is down.

    I trade pullbacks looking for 2-4 pt. gains; 1.5 pt. stops.
  3. I like to see the market through my own eyes, so instead of using technical inidicators I look at the chart and determine where the market is trading in relation to previous highs/lows.

    The bulk of my trading takes place in energy futures where I use 5 minute and 1 minute charts... I use the opening range as an indicator of bias, look for opportunities to buy above and I'm a seller below the OR.
  4. HH/HL x2 or LL/LH x2

    those are all you need.
  5. vingbel


    Agreed. But over what time frames?
  6. vingbel


    1) So you use the general trend as you interpret it based on the last few days, weeks, months or years? (Without charting or indicators.)

    2) Do you use the first half hour of the day to determine the Opening Range or longer?

    BTW, thanks for your concise and understandable reply.
  7. Whatever time frame you trade. Then take a larger timeframe to help guide.
  8. vingbel


    Understood. But. IMHO, you need to define the time frame to determine whether what you're seeing is truly a HH (or LL.)

    In other words, you need a point of reference.

    Like the other poster says, for his final reference (after determining bigger trend,) he uses the opening range to determine what the H is and what the L is.
  9. a swing high or swing low is the same on any timeframe.
  10. The opening range time frame is a matter of personal preference... some people like 30 mins but impatient folks like me prefer a 5 minutes opening range.

    I use the 5 minute opening range in the futures markets of my preference and add a stretch above/below similar to the one described by Toby Crabel in his legendary book. I don't go long once it trades above with a stop on the other side of the range... I use the OR as an indication of bias and try to go long when the market is moving up using pullbacks in the 1 minute chart.

    Even though is always better to keep an eye on the trend of the hourly chart I have found good trades defying the trend if price is above the OR.

    The opening range is a useful tool, I strongly suggest to read Mark Fisher's "logical trader" and Toby Crabel's day trading book.

    #10     Sep 16, 2008