How many of you use a trend filter in your trading? I have been using my own trend filter (it involves moving averages) recently and it seems to be helping. I am missing some opportunities that I see but I am ensured that I will not be on the wrong side of a powerful trend (which is how traders typically blow up).
How responsive is your trend filter? I've seen some that filter out chop, but by the time they give a signal, the trend is over.
In addition to a trend filter, it is best to apply to a couple of time frames for added gain. I will only trade on my lower signal time frame if my longer frame chart shares the same trend direction.
It is based on a slow ema being above or below a fast ema. Plus the 2 emas must be diverging rather than converging. I use a 5 min chart. And you now know exactly which indicator I use and how I use it as a trend filter.