TA: Trend / Range

[kako]

Hello

please contribute to this thread with ur valuable knowledge n experiences. i believe we have a great community of seasoned traders here.

how to detect when mkt is in trend and when is in range bound(consolidation) mode?
is it possible to detect this TECHNICALLY?
i know when volume shrinks down(US lunchtime) US mkt goes into consolidation, but let's assume we are trading another market, without having Volume data, say fx mkt.

is it possible to know in what mkt condition we're located, in any moment, According the the PRICE?
as u can read the J.Ehler's interesting article attached to this message, he uses a PHASE indicator, to know if mkt is oscilating(like a sine wave) or trending(phase approximately equals 0 or 360 degrees). even his Phase indicator, is a derivative of price, hence have no new info/ has inherent lag. using ADX sounds more useless, just like other indicators. if they was of any use, users of them would me millionairs by now

i'm looking forward to hear from u all...

Regards
...................................
Kako

 

[kako]

Hi

I'm currently trying to put the Multi Time Frame Analysis Concept, in fx mkt.
as u can see the attached picture, i changed a Stochastic Oscilator, in a way to show different TimeFrame's values, in current TF.
the above Oscilator is for 3Minute Timeframe, the median is for M10 and below is for M15.
3 Time Frame Analysis gives a good estimation of where the trend is exhausted, see the Blue lines, and blue arrow, it was when all 3 TF was Overbought, and then price started to decline(a local high).
but if u look @ ornage lines, there was a 3 TF oversold signal, but price continued to go down.

i know this is the problem with all oscilators, they can remain in overbought/oversold areas for quite along time, with price continuing to rally...
but i'm seeking for a way to DETECT which signal is a correct, and which 1 is a wrong 1?
there are some possibilities:
1- maybe i'm not using correct Timeframes? should i use longer timeframes, say 30 Mins?
2- maybe i'm not using correct number of timeframes? do u think if i use more than 3, it helps?
3- could it help to use other oscilators instead of Stoch.? i don't think so as i tweaked the setting in a way that it reflects the price high n lows, in any given TF.
4- should i use another tool, like BollingerBands, for confirmation of the trade?

as u know, there is no real volume data in fx mkt, so i can't have anythink like VWAP or MPD bands. also instruments are not numerous, also correlated to high degree, so it's not possible to pair trade in the way Grey suggests for stocks.

i'd appreciate any1 who could give any comments on above scenario.


Regards
......................
Kako

Ps. the reason i'm still focusing on fx mkt, is i have not figured out a way to get a feed for TS as i have no creditcard, and esignal needs it even for trial usage.
anyway i think the Grey's approach will work in any mkt; so i'm testing it in fx mkt.

 

[samtron]

Hi

.

i know this is the problem with all oscilators, they can remain in overbought/oversold areas for quite along time, with price continuing to rally...
.

i'd appreciate any1 who could give any comments on above scenario.


Regards
......................
Kako

Ps. the reason i'm still focusing on fx mkt, is i have not figured out a way to get a feed for TS as i have no creditcard, and esignal needs it even for trial usage.
anyway i think the Grey's approach will work in any mkt; so i'm testing it in fx mkt.

Interesting post kako, It really would be nice to kick ass in the forex mkt (but first I think I better learn how to kick some ass in nasdaq )

I think the cci is great when used for exit, it would be used for entry only as a back-up to another main "indicator(s)" of your your choice.

 

[brainsonice]

hello

guys I am new to this BB, thank you Iraj for letting me in on rthis wonderful forum.

I think you can eliminate a lot of errors with your muliple time frame indicator by only trade in the trend of the specific market. That means that in a downtrend you should only go for your short signals. Imho ignore the longs, they will blow up your account. I experienced the same difficulties (with another indicator).

Hope this is any help.

brainsonice

 

[leovirgo]

Hi

I'm currently trying to put the Multi Time Frame Analysis Concept, in fx mkt.
as u can see the attached picture, i changed a Stochastic Oscilator, in a way to show different TimeFrame's values, in current TF.
the above Oscilator is for 3Minute Timeframe, the median is for M10 and below is for M15.
3 Time Frame Analysis gives a good estimation of where the trend is exhausted, see the Blue lines, and blue arrow, it was when all 3 TF was Overbought, and then price started to decline(a local high).
but if u look @ ornage lines, there was a 3 TF oversold signal, but price continued to go down.

i know this is the problem with all oscilators, they can remain in overbought/oversold areas for quite along time, with price continuing to rally...
but i'm seeking for a way to DETECT which signal is a correct, and which 1 is a wrong 1?
there are some possibilities:
1- maybe i'm not using correct Timeframes? should i use longer timeframes, say 30 Mins?
2- maybe i'm not using correct number of timeframes? do u think if i use more than 3, it helps?
3- could it help to use other oscilators instead of Stoch.? i don't think so as i tweaked the setting in a way that it reflects the price high n lows, in any given TF.
4- should i use another tool, like BollingerBands, for confirmation of the trade?

as u know, there is no real volume data in fx mkt, so i can't have anythink like VWAP or MPD bands. also instruments are not numerous, also correlated to high degree, so it's not possible to pair trade in the way Grey suggests for stocks.

i'd appreciate any1 who could give any comments on above scenario.


Regards
......................
Kako

Ps. the reason i'm still focusing on fx mkt, is i have not figured out a way to get a feed for TS as i have no creditcard, and esignal needs it even for trial usage.
anyway i think the Grey's approach will work in any mkt; so i'm testing it in fx mkt.

Hi Kako

This is an interesting thread. I am no expert on FX but, let me contribute my 20c..

1. FX markets run 24hrs.. and there may be distinct trading sessions, e.g, Asian hours and London hours with their own price movement characteristics hence adding more complexity in detecting the dominant cycles. Thought about filtering just London hours.. just my thoughts

2. You might need an indicator, which must not be an oscillator, like Darvas or MA to tell you where the prices are within the historical context. If there is a heavy downtrend, you might expect multi TF oscillators to FAIL .. thus confirming the trend.

3. In order to determine the right Time frames.. let's start from the smallest TF, like 1min then determine the most recent cycle.. ie., which oscillator settings are working at best, say 12 period stochastics is the best for 1 min chart, then I may use half of that TF, ie. 12/ 2 = 6 minute as the higher TF. So you now have 1min, & 6 min. Again you plot 6min chart and study the dominant cycle, then half of that as the next higher TF, say it is 14 period, and you use 14/2 = 7 periods in 6 mins chart, which is 7x6 = 42 mins. So you have 1, 6 and 42 mins as multi TF.
There is a danger of curve fitting.. but there is some truth about curve fitting.. which is to find the best suitable trading strategy based on historical prices.. the essence of TA IMHO.

regards,

 

[kako]

Hi

thank u very much leo, ur answer is very appreciated by me.

i agree with u that i need another tool to detect Range from Trend.
but abt this sentence:

You might need an indicator, which must not be an oscillator, like Darvas or MA to tell you where the prices are within the historical context

i think what u mentioned can be fully done by an oscilator. actually oscilators like momentum and William%R and Stochastic are doing exactly the same thing: finding the high n low in a specific number of candles before, and tell us where we are with regard to MAGNITUDE of that distance, between high and low of specified period.

i like the Three line Break(3LB) method, which been proposed by steve nison in his last book, it's something like Darvas boxes in concept, in my humble opinion.

i agree that i need a tool to differ between Trend n range. they are certainly different, from Ehlers article which i attached to the first post of this thread, i gather:
if the Oscilator, is doing HEALTHY up n downs, like a natuaral sine wave oscilator, i assume it's range bound, trading: sell high, buy low, using Multi TF.
if it goes outa synch. having cluttered behavior, like remaining in extreme values for a long time, and the has no considerable retracement(the indicator i meant, specially in higher TF), then it's trend.
this is my finl conclusion abt this, as i have no PHAZE INDICATOR, like dr.ehlers; to detect if it's in range or trend mode.

as i told before, indicators like ADX and others are quite useless to detect if it's trend or range. Iraj once told(in his old posts) that they give no signal, until the trend is exhausted, i agree with his words.

ur suggestion regarding the sessions is very good, that's what i thought too, this type of trading works in Range mkt, so i have to trade not the Main session of the Currency, i.e i have to trade EUR and GBP in tokyo session, which magnitude of waves and instrument's volatility is much less.

Thnx for ur help anyway, it was much more that 20C though, i prefer others specially grey1 could add their 2 bucks too

Regards
..................................
Kako