Recognizing new trend or correction

foed · Oct 16, 2015

Hello guys,
i would like to ask you, how you are trying to recognize that change of trend has occured and enter the trade.
Are you trying to hit total bottom(up) of correction (or change of direction) or are you waiting for .. lets say 1 or 2 candle going in new direction which will valide your opinion that this is a new direction of chart?
Im really sorry 4 my english.

Thanks a have a great weekend.

tomorton · Oct 16, 2015

There is no way to know when falling price will reach a bottom. Oversold indicators or support levels might help but they are not 100% reliable: plus, many traders cannot interpret them properly.

Most of the time, a price that has been moving in one direction continues to move in that direction. Once it changes direction, there is no way to know how long it will continue.

You can't know what the market will do, only what it has done. But you have to know what you will do.

foed · Oct 16, 2015

I know I know. I just wanted to know, when YOU GUYS enter in trades. What makes you think that it is changing direction

Nice day

alexaherself · Oct 16, 2015

foed said:
What makes you think that it is changing direction

Mostly bar patterns which have reliably proven, with statistical signifcance, for that instrument, on that timeframe, to show that it's likely to be changing its direction. And some considerations about recent support and resistance and my perceptions of their probability of turning into subsequent support or resistance.

Not "indicators" - I'm not interested in when they change direction. They're derived from previous prices and for me they have no predictive powers.

foed said:
Nice day

Not so much, here. It was raining a lot this morning, and its overcast and damp. It's also Friday afternoon, which is pretty useless for trading, for me.

dbphoenix · Oct 16, 2015

foed said:
I know I know. I just wanted to know, when YOU GUYS enter in trades. What makes you think that it is changing direction

Nice day

Track the progress of price with a straight line.

When the line is broken and price moves in the opposite direction, enter the first retracement thereafter (see "If You Can Draw A Straight Line . . .", below).

Fugazsy · Oct 16, 2015

Good question.

I will wait for a move first and then wait for the pullback or stall to enter making sure the momentum is still there. (only me).

If you can read PA properly a naked chart would be enough to establish all the above conditions but here you have to apply a lot of subjectivity, for some traders it is not the ideal, in subjectivity you can see setups everywhere if you are not careful and emotions can kick in which is not good.

To eliminate subjectivity you can use indicators: one for direction, one for entry when prices pauses or retraces, one for when you need to get out and another to trade only when there is momentum.

I think you have a bit of work to do, GL. Fug.

tomorton · Oct 16, 2015

foed said:
I know I know. I just wanted to know, when YOU GUYS enter in trades. What makes you think that it is changing direction

Nice day

Fair enough.

Personally, I'm a trend-follower so the change of direction for me has to be a change back into a trend that is already strong. e.g. I do not often trade long from the bottom of a V-shaped pattern.

I have to see both a positive set-up and confirmation - so price has to print at least one positive day after an interim swing low in an uptrend, but the uptrend has to be well established and strong as well. I use MAs for both trend confirmation and to clarify the strength of pullbacks and re-bounds. Don't trust off-chart indicators at all.

Uranus · Oct 16, 2015

You can easily determine trend and range markets with basic Dow theory. I use a 8 period SMA and look at it's curves.

If we are making higher highs and higher lows then we are in a bull trend.

If we are making lower lows and lower highs, then we are in a bear trend.

If we making higher lows and lower highs, then we are consolidating.

If we are making lower lows and higher highs, then were are breaking out of consolidation or a trend is going into a trading range.

darktone · Oct 17, 2015

I think its changing direction when my limits aren't getting filled anymore.

NVP · Oct 17, 2015

foed said:
I know I know. I just wanted to know, when YOU GUYS enter in trades. What makes you think that it is changing direction

Nice day

everyone is different F..........so a long thread coming

NVP · Oct 17, 2015

foed said:
I know I know. I just wanted to know, when YOU GUYS enter in trades. What makes you think that it is changing direction

Nice day

I follow price bands on currency indexes.........

alexaherself · Oct 18, 2015

foed said:
I know I know. I just wanted to know, when YOU GUYS enter in trades. What makes you think that it is changing direction

Someone (and it may as well be me?) should also mention that more traders probably enter trades when they think/hope it's not changing direction than when they think it is.

scott_miller · Oct 19, 2015

I use a combination of moving averages and previous support and resistance levels. But with time I've given up trying to time the market for the tipping point of when a new trend starts, but rather tried to find the confirmations it has already turned. Losing some part of the trade is better than mistiming it.

0007 · Oct 19, 2015

alexaherself said:
Someone (and it may as well be me?) should also mention that more traders probably enter trades when they think/hope it's not changing direction than when they think it is.

Very astute and important point. You can't be certain it's changed direction until well after the event. Our old mentor Isaac Newton clarified the situation for trend traders with his Ist law of motion. It's so much easier and profitable to jump on an existing trend rather than forecasting its change of direction. Deciding when to get off is slightly harder.

BSD · Oct 26, 2015

foed said:
I just wanted to know, when YOU GUYS enter in trades. What makes you think that it is changing direction

I have always believed in keeping it as simple as possible, and that there is absolutely no need to re-invent the wheel, that the answers to all questions are freely available out there if you're just willing to receive them.

Paul Tudor Jones:

"I have one strong rule and that is when it comes to a stock if it's above the 200 day moving average, I'm gonna be long it, and if it's below it, I'm either not gonna own it or I'm gonna be short it, period end of story and I just let that govern every single thing that I do."

http://www.marketfolly.com/2013/06/notes-from-virginia-investment.html

Recognizing new trend or correction

foed

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tomorton

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foed

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alexaherself

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dbphoenix

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Fugazsy

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tomorton

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Uranus

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darktone

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NVP

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NVP

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alexaherself

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scott_miller

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0007

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BSD

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