I am phasing out most of my indicators and going with predicticators instead. But the one type of indicator that I will use are thermal heatmaps of the fractal energy of the volatility. This is the heatmap image of the 1 year daily on the Russell 2000. I am waiting for a yellow/red streaks to form on the lower right to know when the trend may end.
When to exit, both targets and stops, is where I have spent a lot of time analyzing, testing, and trading over the last couple of years. I only trade ES and NQ or the micros and I have gravitated to a short time frame. Not scalping but 15-30 minutes in most trades unless I'm stopped out sooner. I tried letting my winners run and found I gave up too much when they finally quit running. I am now favoring taking a reasonable profit and reentering if the trend is still showing a few minutes later. I also went from trailing to fixed stops, but if my first target is hit I move my stop to BE. I almost always have two stops and two targets at 50% each. As several have noted in this thread time frame, what MA, and what chart you are using are pretty much an infinite number of combinations. For my purposes I did a lot of testing on the time frame I was targeting and using MFE and MAE stats was able to get a reasonable measure of a typical move or a typical whoops I'm wrong on this entry level. I am using 1, 5 and 30m charts. I use Ehlers MAMA indicator which is close to an 8/3 EMA crossover, but it's easier to implement in MotiveWave which I use. I also use ADX as a trend strength indicator to try and stay on the sidelines until a trend is showing some strength. You will have to do your own testing because each situation is unique and I'm still learning on this strategy after almost two years at it. I couldn't find anything that reacted fast and consistently enough to use as an exit trigger. Doesn't mean it doesn't exist. That's why I decided to just take a reasobale profit and move to the next trade that could be a continuation or a reversal.
expi I think has been researching and finetuning his uhhh "proprietary intellectual property" since before Moses came down from the mountaintop. Best not go down that path.
This was actually a good post(especially for a debut)but I had to really push myself to read it. That wall of text should be broken up into about 12 paragraphs.
Semper you are right about that. I sort of got into a stream of consciousness mode. I'll pay more attention on future posts.
Good on ya mate! Thanks for taking that constructive criticism the right way. Looking forward to hearing more from you. Cheers.
@Oadmani Here is another example of how I feel that, at least for folks like me, it might very well be possible to come up with a rational, logical, relatively objective and systematic approach to getting in and out of trends by crunching the numbers until one is able to arrive at what might be close to some seemingly ideal measures... When I developed my system, part of my goal was to end up with something reflective of flight dynamics, which use the laws of physics to explain how forces act on vessels to govern their performance, stability and control to ultimately determine their velocity and attitude with respect to time. By being able to define the velocity and attitude of price with respect to time (in a manner of speaking) the matter of deciding whether price is rising, falling or simply "treading water" is aided by much less ambiguity. (P.S. The reason I called the above envelope the "pepper" channel was because it was originally half of a pair of two envelopes, with the other envelope being white [salt] and this one being black.)
%% OK but I always look for truth in a a joke or cartoon. I also like a larger moving average [ma]for context; Including some mentioned here. CME mentioned some standard ma , good start. I never worry about KFC not giving me ''secret recipe'', most all markets are much bigger than that. The fact more than a few institutions will not truthfully admit to using ma ; that's not really my problem., I'm certainly not against average trends; or exits on them. Easy to get back in, only if I want to.
They are right to be skeptical. You are wasting your time with the exit problem in my opinion. These are 50-year-old questions. There are no answers. If there were any, everyone would be rich. Trend following requires high diversification. With some trades, you will exit early, with some close to the top, and with some late, although many will trigger a stop, but on average it will be fine and make some return over the years. You should not worry much about the exits but more about your conviction to follow the system after a while. I should not include a link to this article by one of the blogs I closely follow, but I think it will help here. One of the problems with trend following is all the optimizations you either do consciously or are hidden.