Is there an indicator that “normalizes” pullback signals against varying trend strengths?

Discussion in 'Technical Analysis' started by ddcet, Oct 29, 2020.

  1. Real Money

    Real Money

    Its the "inertia" study in ThinkorSwim.

    Basically, its measuring price changes relative to estimates of a linear relationship between time and price. You have to remember, though, its not a point estimate, and the distribution of error terms is unknown. So you can't really use it to "normalize" trend or momentum.

    Its like calculus. An LRMA is essentially a way to differentiate price.

    This study is 'differentiating' a differential of price and a linear estimate of trend.

    https://tlc.thinkorswim.com/center/reference/thinkScript/Functions/Statistical/Inertia

    You could say its measuring momentum, or deviation from trend, or trend strength.
     
    #31     Aug 14, 2021
  2. easymon1

    easymon1

    Last edited: Aug 14, 2021
    #32     Aug 14, 2021
  3. There is no way to know when a trend ends. However you can determine what is happening on a lower time frame by using TA and PA. For example overall the ES has been in a bullish uptrend over long periods of time.

    In a lower time frame you can see a downward trend that is expressed with LH and LL. So if you are trading the lower time frame it's safer to go short which I did recently.

    I would say TA is more of an art than a science. Using lagging indicators will not work against real traders that can read price action like seeing the lady in red in the Matrix.

    This can only come with screen time. I am not saying spend 8 hours a day looking at charts, but you do need to put in at least 1 hour per day till you get 10,000 hours.

    Also, you don't need to know when a trend ends, that is what a stop is for. As long as your overall win rate is above 55%, you will do well if u can manage your risk and not over or revenge trade.

    Don't let the perfect be an enemy of the good. There is no 100% win rate based on indicators alone.
     
    #33     Aug 17, 2021
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