Trend again (technical ways of entering a trend)

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Old Jan 21, 2008, 2:05pm   #1
 
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Trend again (technical ways of entering a trend)

It seems to me that there are really only 4 broad technical methods for getting involved with a trend. They are;

a. Breakout (B/O)
price breaks out and closes outside of a range/consolidation or support/resistance level, or previous hi or lo.

b. With momentum
ie a thrust candle.

c. On a pullback
Buy the dips, sell the rallies on a pullback to an ma/previous support or resistance area, fib etc..

d. Indicator (s) reading/patterns
ADX trending reading or Macd crossing zero line, RSi crossing 50 etc etc...

Which one (s) do you favour and why?

I'll start it off by stating that I favour c. combined with d, ie certain indicator patterns, because this ensures that sufficient technical confluence is present ie repeatable pattern of indicators at the repeatable phenomenon of SBR/RBS.
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Last edited by bbmac; Jan 21, 2008 at 2:50pm. Reason: broadened definition of range
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Old Jan 21, 2008, 2:14pm   #2
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All these have their own distinct risks. I prefer c but of course some pullbacks are actually reversals.... c'est la vie.

Many people have found that trend-following is the least risky approach (though not necessarily most profitable). I suppose strictly speaking a breakout is not trend-following, its an escape from a range (but not necessarily unprofitable). Likewise, indicator triggers may not be trend-following when they signal entry.

On the other hand, one of the objections to the Turtle strategy as an example - although successful and a trend-following aproach - is that it requires entry at a high in an uptrend, which I have never found to be profitable for me personally.
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Old Jan 21, 2008, 2:28pm   #3
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Thanks for starting a new thread. i have to go out, but I thought that I might post this chart of this morning's FT, a 5 minute chart. I was looking at the MACD divergence and the subsequent 25 point rise, so far.

Although this not a re-entry, it could be an early warning signal to to watch for at a later stage.

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Last edited by Splitlink; Jan 21, 2008 at 2:35pm.
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Old Jan 21, 2008, 2:35pm   #4
 
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Quote:
Originally Posted by bbmac View Post
It seems to me that there are really only 4 broad technical methods for getting involved with a trend. They are;

a. Breakout (B/O)
price breaks out and closes outside of a range or support/resistance level, or previous hi or lo.

b. With momentum
ie a thrust candle.

c. On a pullback
Buy the dips, sell the rallies on a pullback to an ma/previous support or resistance area, fib etc..

d. Indicator (s) reading/patterns
ADX trending reading or Macd crossing zero line, RSi crossing 50 etc etc...

Which one (s) do you favour and why?

I'll start it off by stating that I favour c. combined with d, ie certain indicator patterns, because this ensures that sufficient technical confluence is present ie repeatable pattern of indicators at the repeatable phenomenon of SBR/RBS.

it's c for me, but only because I'm not clever enough to use a,b or d

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Old Jan 21, 2008, 5:13pm   #5
 
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Slow moving averages do it for me.
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Old Jan 21, 2008, 5:22pm   #6
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a and b combined for me...and in the context of Strength v Weakness...forex only method
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Old Jan 21, 2008, 6:03pm   #7
 
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Method 1 is trend re-entry = c
Method 2 is trend reversal = b

Both methods include "d" ie indicator patterns and extreme readings. But, confluence of other factors is extremely important.
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Old Jan 21, 2008, 6:54pm   #8
 
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Quote:
Originally Posted by bbmac View Post
It seems to me that there are really only 4 broad technical methods for getting involved with a trend. They are;

a. Breakout (B/O)
price breaks out and closes outside of a range/consolidation or support/resistance level, or previous hi or lo.

b. With momentum
ie a thrust candle.

c. On a pullback
Buy the dips, sell the rallies on a pullback to an ma/previous support or resistance area, fib etc..

d. Indicator (s) reading/patterns
ADX trending reading or Macd crossing zero line, RSi crossing 50 etc etc...

Which one (s) do you favour and why?

I'll start it off by stating that I favour c. combined with d, ie certain indicator patterns, because this ensures that sufficient technical confluence is present ie repeatable pattern of indicators at the repeatable phenomenon of SBR/RBS.
There's a fifth choice, if one trades via price and volume only (there he goes again . . . ): reading what one perceives as the intentions of traders before the breakout and entering prior to it. This has the advantage of enabling one to "ride the wave", if it comes (if it doesn't, he can set a very tight stop and has a good chance of getting out at breakeven). If the breakout is aborted, he has at least a few shekels in his pocket.
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Old Jan 21, 2008, 10:42pm   #9
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Originally Posted by bbmac View Post
It seems to me that there are really only 4 broad technical methods for getting involved with a trend. They are;

a. Breakout (B/O)
price breaks out and closes outside of a range/consolidation or support/resistance level, or previous hi or lo.

b. With momentum
ie a thrust candle.

c. On a pullback
Buy the dips, sell the rallies on a pullback to an ma/previous support or resistance area, fib etc..

d. Indicator (s) reading/patterns
ADX trending reading or Macd crossing zero line, RSi crossing 50 etc etc...

Which one (s) do you favour and why?

I'll start it off by stating that I favour c. combined with d, ie certain indicator patterns, because this ensures that sufficient technical confluence is present ie repeatable pattern of indicators at the repeatable phenomenon of SBR/RBS.


a.too slow ,good portion of the swing is missed plus a bigger stop needs to be used.
b.momentum is great if you know how to use it.
c.is great if your confident with s/r, wouldnt trust fibs or pullbacks to ma
d.adx ,macd,rsi etc not reliable enough.

Of course you could always switch to a lower timeframe and wait for your indicators to roll over.

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