Determine Trend Direction

FractalTraders

Newbie
5 1
Objective: Build a master list of methods for determining trend direction.

Aspiring traders will benefit from a single point of reference for developing this particular ability. OP will be continuously updated with convenient links to the different strategies.

Please post anything you don't see on this list.

1. At a Glance
2.
3.

John
We don't count on luck.
 

Quantt

Established member
944 57
Moving averages crossovers, for example when a fast moving average is crossing a slow moving average, it will indicate start of a trend...
 

foroom lluzers

Veteren member
3,611 135
1.6 Defining a trend
Point is that every trader should choose 1 time frame (maximum 2), for their trend definition. This trend definition must always be 2-3, time frames higher than the one of entry. Example: entering on 15 or 30 min charts, use 4 hour for trend definition.
• In a down trend the buy is 10 pips above the high of last two peaks.
• In a uptrend the buy is 10 pips above the high of last peaks with full candle close.
• In an uptrend sell is 10 pips below the low of last two troughs.
• In an down trend sell is 10 pips below the low of last troughs , with full candle close.
• Break of 2 sets of major supports or resistances (with a minimum 50 pip distance between the two ) constitutes a trend.
• Sloping trend and channels must be evident on 4 hour charts (not only on 15 min or 30 min)
• Corrections to the trend /channel lines are not down trends in an up trend , and vice versa.
 

piphoe

Legendary member
10,038 194
1.6 Defining a trend
Point is that every trader should choose 1 time frame (maximum 2), for their trend definition. This trend definition must always be 2-3, time frames higher than the one of entry. Example: entering on 15 or 30 min charts, use 4 hour for trend definition.
• In a down trend the buy is 10 pips above the high of last two peaks.
• In a uptrend the buy is 10 pips above the high of last peaks with full candle close.
• In an uptrend sell is 10 pips below the low of last two troughs.
• In an down trend sell is 10 pips below the low of last troughs , with full candle close.
• Break of 2 sets of major supports or resistances (with a minimum 50 pip distance between the two ) constitutes a trend.
• Sloping trend and channels must be evident on 4 hour charts (not only on 15 min or 30 min)
• Corrections to the trend /channel lines are not down trends in an up trend , and vice versa.
interesting set of rules, love to use them in there entirety as a system..

do they work as a "closed" system?

IOW, is this all i need?
 

FractalTraders

Newbie
5 1
Please read the thread objective before posting. Thanks
 

Dowser

Experienced member
1,293 293
One of the ways I define a trend is bar closes above/below a moving average (typically 5 EMA) this can be applied to any time frame, but for me and my trading style it will range from M5 to H1
 

tomorton

Legendary member
7,313 976
Determining direction is just Step 1. And straightforward. After that, I suggest two further measures are useful if this is going to be the basis of a trend-following trade, helping to optimise entry and also to select the best instrument from a number of potential charts -
a) probability of trend continuation over desired time period or to desired target,
b) probability of imminent and significant with-trend price movement
 

FractalTraders

Newbie
5 1
Determining direction is just Step 1. And straightforward. After that, I suggest two further measures are useful if this is going to be the basis of a trend-following trade, helping to optimise entry and also to select the best instrument from a number of potential charts -
a) probability of trend continuation over desired time period or to desired target,
b) probability of imminent and significant with-trend price movement
Excellent points. Would you like to elaborate on how you go about determining the probabilities you listed?
 

EnlightenedJoe

Experienced member
1,950 95
The most reliable way to determining the trend is by taking a real position. The trend will move in the loss making direction. There's greater than 90% probability of that occurring. All aspiring "traders" already know that. But they refuse to accept what they can see with their own eyes.

I use my gut to calculate this probability. I don't know how it works, but it works.
 

FractalTraders

Newbie
5 1
I don't understand your method Joe. Please articulate in a more comprehensive fashion. Thanks.
 

EnlightenedJoe

Experienced member
1,950 95
Ok, more comprehensive fashion. Throw a dart at a list of instruments written on a 2"x2" piece of paper from 8 feet away. Pick the instrument hit by dart. Toss a coin for direction, heads for buy, tails for sell. Now go put on a position with real money. No monopoly money is no good. The price will trend in the loss making direction with 90%+ certainty.
 

Quantt

Established member
944 57
No need to come on, just follow my ultimate DIY trend finding technique and see for your self.
Actually there have been studies, one in Austria and one in Canada, that with proper risk management, you can still make money on coin toss / dart entries...
 

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