How to define a strong trend ?

Discussion in 'Technical Analysis' started by moonmist, Oct 28, 2012.

  1. moonmist

    moonmist

    Hi,

    Is there any way to define a strong trend objectively ?

    Any comments and suggestions would be appreciated.

    Thanks in advance.:)
     
  2. mutluit

    mutluit

    Some TA indicators try to detect it (MACD, ATR, Bollinger Bands etc.).
    Just study and play with some indicators on these stocks:
    DIS AMGN LEN CMCSA VMED
     
  3. MadeMan

    MadeMan


    its obvious when u look at a chart ... :)

    [​IMG]
     
  4. moonmist

    moonmist

    IMHO:

    A better statement may be:

    It is obvious, when you look at a chart, provided that you had more than 10,000 hours of screen time. :p
     
  5. MadeMan

    MadeMan


    :D


    just wanted to point out .... no indicators needed
     
  6. NoDoji

    NoDoji

    The best way to define a strong trend objectively is to look at as many after-the-fact examples of what you consider a "strong trend" in your selected trading time frame and note as many markers (price patterns, indicators) as you can that occur during that strong trending price run. You should find certain markers that occur across all the examples. These become your strong trend identifiers.

    I've found that the one marker that occurs in strong trends in both my 5-min intraday time frame and my daily swing trading time frame is a failure of price to close below a 20-period EMA before resuming. In extremely strong trends, price may not even pull all the way back to a 20EMA before resuming.

    I've also found that the price action leading into the start of strong trends is usually a break out of a period of low volume consolidation with no retrace into the consolidation zone or a significant gap up through previous resistance or gap down through previous support with no retrace into the gap zone.

    Since you never know for sure if either of these conditions will trigger a trend, much less a strong trend, you must do what all traders do on a regular basis: Assume the risk, be prepared to take a loss at the price where the breakout would be considered a failure, and let the winner run until the trend puts in a clear reversal signal in your trading time frame.
     
  7. 5 bars back on the timeframe your trading, calculate how much of it is within the noise and deviations from the noise. Then look at more bars back.

    (uptrend)

    h>h1
    h1>h2
    h2>h3
    h3>h4
    h4>h5

    l>l1
    l1>l2
    l2>l3
    l3>l4
    l4>l5

    calculate how many bars achieve this before failing (subset 1)

    subset 1(high) > subset 2 (high)
    subset 2(high) > subset 3 (high)
     
  8. moonmist

    moonmist

    I have been examining price, indicators, other markers, etc., to find a set of conditions under which common reversal patterns would fail most of the time. Still experimenting.:p


    Yes. In a strong uptrend, price does not close below the twenty-period EMA. In an extremely strong uptrend, price may not even close below the nine-period EMA. How many bars need to close above the twenty or nine-period EMA before one can say that there is a strong uptrend ? I guess that is where experience and screen time count.:D



    Yes. As a trader, we have to deal with uncertainty. No risk, no gain.:p
     
  9. vinc

    vinc

    funny how after so much stress on objectivity so many people still don't get it or disregard the notion completely / e.g. by some stupid 10 000 hr rule - as if 1000000000000000 hours would make a trader objective!! /
    well.. waste of time probably..
     
  10. Lucrum

    Lucrum

    + 1


    Which is absolutely true.



    What sort of "definition" is the OP looking for? Something that can be coded?
     
    #10     Oct 28, 2012