Wow,....I realize this is my first post here but you guys are making this trend ID and measurement thing WAAY too difficult. ID of trend can be as simple as following MA crossovers, or looking at MACD or ADX and drawing simple trendlines as mentioned earlier. For those that say that if I identify it then it will be too late and it will change is completely false. Depending on your time frame you may or may not be correct. There are many trends wihin trends. It just depends on time frame used. Maybe a micro trend is on 15 min TF, short term = 60 min, med = daily, longterm = weekly, but this is dependent on the trader andd how he defines longterm and short term. If the 2 or 3 MA all line up stacked one on top of other and price is on top of those that UP trend...simple. One could say if MACD > 0 you are in up trend and MACD < 0 downtrend. When it fluctuates between 1-2 boxes around the 0 line you have consolidation OR beginning a new trend. These are just examples of ways to figure it out at that point in time. As for "measurement" of the trend I think too much focus on this has been deriving a certain number. Bottom line is you want to know if a "trend" is stronger than an index or benchmark stock or whatever you define as a "line" that you want to outperform. Looking at the ratio of RSI to that benchmark is quite easy to do. Plot a RSI of the ratio of IWM:SPY for example and you can see if IWM is "outperforming" the SPY if RSI is rising and vice versa. Again very visual and simple method. Lastly, and probably more importantly, in my opinion is that it is LESS important to identify the strength and momentum of trends than it is to just identify that one exists in the first place. I assume most of us on here are shorter term traders and not buy and hold Buffett style investors. SO,..we SHOULD be able to OUTPERFORM the index (say SPY here) by JUST TRADING the TRENDS of index. As the index trends higher on say a 60 min or daily TF we go long. As it "trends" down we go short. Over a year there are many trends in all directions so we should be able to catch the MEAT of each of these and outperform. Now of course to get EVEN BETTER return we would like a trend that has MORE momentum/strength than the index trend itself. So "measurement" can boost returns but it is not the end all and be all of making money in a trend. For those that think,...what does he know,...I have been trading for about 4 years now and YES I am profitable. My strategy focuses on trend trading. Good Luck.
Like many, you just don't get it. Relying on MACD and RSI for TA is like using fingerpainting to copy the Mona Lisa. Better tools should be sought.
I dont 'get it' huh...?.....My account statements would beg to differ. Why change what isn't broken? This method is FAR simpler than your calculations. Ever heard of K.I.S.S.? Did your methods spot the "trend" in the stock market, financials, emerging markets, gold, material sectors the last few days? Mine did between Monday and Tues afternoon. Have you been on the right side of the recent trend down? Maybe you could describe your methods for ID of a trend early on. Then we could allow readers to decide for themselves which is easier and more fruitfull. You could also describe your methods of "measuring" strength of a trend. I would be happy to do this same. Afterall this is supposed to be an exchange of ideas. Not just "...your way sucks and you dont 'get it'..." kind of board right?
Also,...if you think using certain TA tools like MACD & RSI are so much like "fingerpainting the Mona Lisa" then why are you posting in a TA section? Obviously you find value in TA to some extent,...just maybe not those indicators. I usually find there are many ways to achieve the same thing and I find theses indicators to be HIGHLY useful. Again,...an explanation of your method in using the Kaufman ratio and Sortino ratio would be most educational and probably benefit us all.
LOL. that one was very good. thanks for .... mona lisa , hahahahaha @N54_Fan congratulations to your success. "What is a trend ???" Nobody here on this funny forum, could explain me what a trend is ??? Please give me wisdom, trendtraders... thanxs
I already did that is this thread. Perhaps if you bothered to read the whole thread before posting, you'd be better prepared to post.