How do you determine trend direction?

I think that before one can determine trend, one must define what a trend is.
Not everyone has the same definition of trend.

 

Bingo !

 

Love this...so true. You can assume a previous RESISTANCE level was involved as well. Market did/does a great job of leaving many left behind before the breakout!

 

but theres also many failed breakouts too...

 

First thing first, I use Transportation Index, enclosed, if RSI is too near or above 75, the end is near, and if below 50, might be close to the bottom, deep quick long spikes are best going down and I will often start looking for "Thrust Bars" on weekly charts and that is enclosed plus nifty signals I have used through the years.

I use different approaches for finding trend-it not hard to select since we looking for highs to go up to start uptrend or lower lows to seek downtrend, I lean on using John Hill's definition of trend of having a "Thrust Bar" or can call it Freebar and it is entirely free of 18sma, the entire range is above or below the 18sma. The exception is when the close is on wrong side, meaning want close above the open for uptrend and close is below open for downtrend. I can use this on any time frame but best for me on Weeklies, on dailies I prefer to use slope, but if you want to stay strictly without any indicators, you can use close beyond recent pivot. On intraday I use slope and close beyond pivots for certain signals.

I no longer use RSI to find Divergence as my eyes can see divergences as when highs/lows are broken by small amounts, most indicators will show divergences, I use indicators differently than most, it is often easier to show those I mentor as they have less confidence in themselves in beginnings and after they see price and learn Support/Resistance and how often it works, anyone would gain confidence that trading with edge can be achieved, more we learn about chart patterns, more we understand price, it will never be 100% winning trades, and so long as you keep risk to no greater than 2%, you have a better opportunity of success but have to do couple years of practice, learning when not to take signals as chart saying not good to take trades against S/R, when to take partial profits when coming to S/R. When it safer to hedge when opening stock/ETF/Commodity positions. I rather lean on being safe than taking undue higher risk. Knowing what the risk on trades should be are found through back testing.

Starbucks times

 

If you're day trading, you should forget about trends. By the time you've spotted the trend (and missed out on the move) and confirmed it, it will reverse on you.

Better to focus on identifying where and how price reverses, because persistent trends is the exception, not the rule, intraday. At least on the instrument I'm trading.

 

That's equally so of every other time-frame as well (without it being a reason not to trade trends), surely?

It's one of those "It must be true: I read it at EliteTrader" moments!?!

Please excuse my mentioning that I'm really glad nobody ever tried to tell me any such thing when I was starting out. Beyond that, and things they'd rightly censor, I have no way of responding to this assertion except to say as firmly as I can that it "isn't my experience at all."

 

Sometimes you just have to shake your head.

 

What definition of a trend are you referring to?

 

Basically this is the problem. The only trends that continue on are ones where no strict stop loss can be placed anywhere near by because the move is already extended so far from any previous major s/r level. thats the problem.