Objective way to identify trend

Khalul

Newbie
7 0
I have a trend trading system and most losses appear in the range market condition. What can I use as a range identification for my system other than looking at trendlines and swing highs lows dynamic? I tried using ADX but it doesn't work well, it often signals range when there is a trend and vise versa.
 

dbphoenix

Legendary member
6,952 1,245
Price has two states available to it: trending and ranging. If you don't want to look at trendlines, then you're going to have a more difficult time finding ranges. You may be interested in the pdf I uploaded here. In a nutshell, once your trendline is broken, the probability of ranging increases. If an attempt at a reversal fails, the probability of ranging is that much greater.

Your thread title says "objective way to identify trend". As you have a trend-trading system, I assume that what you're looking for is an objective way to identify ranges. The above will help you do that.

Db
 

Khalul

Newbie
7 0
Price has two states available to it: trending and ranging. If you don't want to look at trendlines, then you're going to have a more difficult time finding ranges. You may be interested in the pdf I uploaded here. In a nutshell, once your trendline is broken, the probability of ranging increases. If an attempt at a reversal fails, the probability of ranging is that much greater.

Your thread title says "objective way to identify trend". As you have a trend-trading system, I assume that what you're looking for is an objective way to identify ranges. The above will help you do that.

Db
Thanks.
I don't mind trendlines. The logic was that decisions I make about whether it's a trend or not may be a bit subjective thus making my strategy assessment not 100% reliable. But so far the trendlines is the best way to go.
 

dbphoenix

Legendary member
6,952 1,245
Thanks.
I don't mind trendlines. The logic was that decisions I make about whether it's a trend or not may be a bit subjective thus making my strategy assessment not 100% reliable. But so far the trendlines is the best way to go.
There's no reason for trendlines to be subjective. For an uptrend, draw a line across the first two swing lows and a parallel line across the intervening swing high. That's your trend channel. Flip for a downtrend. Add volume and they can provide you with a plan of action.

See the image posted here.

Db
 
M

member275544

0 0
I have a trend trading system and most losses appear in the range market condition. What can I use as a range identification for my system other than looking at trendlines and swing highs lows dynamic? I tried using ADX but it doesn't work well, it often signals range when there is a trend and vise versa.

You could look at the donchian channel. The donchian is a measure of new highs or lows taking place. if there are no new highs or lows within a certain time period, that I find is a really good indication of a range. it doesnt look at swings, just whether a new high or low has taken place
You can easily use that within technical screeners also.
here's an example:
this is a daily chart using a setting of 20. so no new highs or lows for that period and the dochian is flat, clearly identifies the range
 

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dbphoenix

Legendary member
6,952 1,245
Indicators are useful for scanning if one has not yet put together a universe of stocks to monitor. Otherwise it's just a matter of drawing a box. A failure to make higher highs or lower lows is ipso facto a range, just as higher highs or lower lows defines trend.

Db
 

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