Is the concept of momentum and trend trading flawed?

This is a discussion on Is the concept of momentum and trend trading flawed? within the Technical Analysis forums, part of the Methods category; Originally Posted by Dr. Toad I have never really used indicators so I'm going with no on this one. I ...

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Old Jul 20, 2017, 10:24am   #25
 
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Quote:
Originally Posted by Dr. Toad View Post
I have never really used indicators so I'm going with no on this one. I am assuming you are talking about divergence between an indicator and the price action. Which indicator would you use for this?
Not necessarily price. Could be 2 moving averages for instance. They will diverge on upward momentum and come together as momentum slackens until they cross.
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Old Jul 28, 2017, 1:17pm   #26
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Trend trading is dangerous, as it's just following the herd down the usual path of misinformation towards the final margin call.

Click the image to open in full size.

So, what's happening in the PA?

Click the image to open in full size.

In the uptrend, the IT (Institutional Trader, who runs the market) is swapping his net position from long to short, using the common knowledge of trend and SD to fill his orders, so that

Click the image to open in full size.

There's no such thing as trend. All there is is an engulf which has or hasn't yet hit its target.
But that's a lesson for another day
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Old Jul 28, 2017, 3:58pm   #27
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Quote:
Originally Posted by Ifmyante View Post
Trend trading is dangerous, as it's just following the herd down the usual path of misinformation towards the final margin call.

Click the image to open in full size.

So, what's happening in the PA?

Click the image to open in full size.

In the uptrend, the IT (Institutional Trader, who runs the market) is swapping his net position from long to short, using the common knowledge of trend and SD to fill his orders, so that

Click the image to open in full size.

There's no such thing as trend. All there is is an engulf which has or hasn't yet hit its target.
But that's a lesson for another day

I didn't recognise exactly what you're talking about. Trend-following is simple, low risk and rewarding. I didn't recognise the style of trading your diagrams showed but maybe that's a good thing for me.

What does SD mean?
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Old Jul 28, 2017, 4:15pm   #28
 
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If there's no such thing as trend, what has the market been doing for the past nine years?
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Old Jul 29, 2017, 12:14pm   #29
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It's been filling small ranges in a large range, picking up stops at every extreme.
Business as usual
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Old Jul 29, 2017, 12:36pm   #30
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Originally Posted by tomorton View Post
I didn't recognise exactly what you're talking about. Trend-following is simple, low risk and rewarding. I didn't recognise the style of trading your diagrams showed but maybe that's a good thing for me.

What does SD mean?
SD is supply/demand. It's a trick used to make the herd feel they can have an edge in their trading, so they'll keep depositing more after every margin call, because they're "so close to getting it"

Trend following is dangerous!
Go to the charts, and come back and tell me that this isn't to be found all over them:
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Old Jul 29, 2017, 12:44pm   #31
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Since very few can benefit from trends because most have no capacity to deal with the counter-trend moves that are specifically designed to defeat trend followers, the question of whether trend exists or not is not critical in practice.

The best time to jump on a trend is wait for most if not all trend followers are dead. That way the merchants will have no more reason for the counter-trend move to continue. There will be no money in it.

Last edited by EnlightenedJoe; Jul 29, 2017 at 12:52pm.
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Old Jul 29, 2017, 12:57pm   #32
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Originally Posted by EnlightenedJoe View Post
Since very few can benefit from trends because most have no capacity to deal with the counter-trend moves that are specifically designed to defeat trend followers, the question of whether trend exists or not is not critical in practice.

The best time to jump on a trend is wait for most if not all trend followers are dead. That way the merchants will have no more reason for the counter-trend move to continue. There will be no money in it.
That's not the worst place for learners to begin, but a deep understanding of the use of propaganda in trading education allows for the picking of tops and bottoms. Those who abhor drawdown will naturally strive for the latter
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