What qualifies as a trend?

tomhunter

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Hi

What qualifyes as a trend would just 1 upward movement be an uptrend or would it have to be a longer or staggering upward movement.
are uptrends always the longer timeframe or can you be in a uptrend on a larger timeframe but be in a downtrend on a shorter one.

Thank You
Best Regards
All help greatly appreciated
 
tomhunter said:
Hi

What qualifyes as a trend would just 1 upward movement be an uptrend or would it have to be a longer or staggering upward movement.
are uptrends always the longer timeframe or can you be in a uptrend on a larger timeframe but be in a downtrend on a shorter one.

Thank You
Best Regards
All help greatly appreciated

1- Uptrend = Higher highs and higher lows
Downtrend= Lower lows and lower highs

2- You can have trends in a any time frame. The price series is fractal: you can't tell the difference between a 30 minute chart and a daily chart, for example, by just looking at it. For practical puposes, however, you want to be aware of higher time frame trends because they impact on movements on lower time frames.
 
FXSCALPER2 said:
1- Uptrend = Higher highs and higher lows
Downtrend= Lower lows and lower highs

2- You can have trends in a any time frame. The price series is fractal: you can't tell the difference between a 30 minute chart and a daily chart, for example, by just looking at it. For practical puposes, however, you want to be aware of higher time frame trends because they impact on movements on lower time frames.

Yeah thanks alot, but lets say 1 bar with higher high and higher low than the previous bar that in itself wouldn't be an uptrend or would it?

Ah so look at this link http://www.babypips.com/images/chart-types/uptrend-downtrend-chart-lg.gif

The specific parts are labelled as uptrends and downtrends but it can also be said that the entire chart is an overall uptrend right? Or is that incorrect?

When people say dont trade against the trend would they mean on the chart above, aginst the overall trend on that chart (which is upwards) or against the smaller trends within it.

For example lets say you were trading at the time of that chart and you were in one of the downtrends but obviousally as the entire chart is trending upwards would you be trading with the trend if you went long or short?


Thanks alot
Best Regards

Thanks alot
 
tomhunter said:
Yeah thanks alot, but lets say 1 bar with higher high and higher low than the previous bar that in itself wouldn't be an uptrend or would it?

Ah so look at this link http://www.babypips.com/images/chart-types/uptrend-downtrend-chart-lg.gif

The specific parts are labelled as uptrends and downtrends but it can also be said that the entire chart is an overall uptrend right? Or is that incorrect?

When people say dont trade against the trend would they mean on the chart above, aginst the overall trend on that chart (which is upwards) or against the smaller trends within it.

For example lets say you were trading at the time of that chart and you were in one of the downtrends but obviousally as the entire chart is trending upwards would you be trading with the trend if you went long or short?


Thanks alot
Best Regards

Thanks alot

Definition of a trend line is at least 3 touches to that line. Two touches don't make a trend.
More frequently the trend line is touched more significant it is.
Greater the time interval between touches the more significant the trend becomes. (Three touches on the daily charts for an uptrend is more significant than three touches to the hourly charts for a down trend. )

Trends depend on your trading time window as to which you wish to follow.


PS Strongly recommend you read a good book before asking basic questions.
 
tomhunter said:
Yeah thanks alot, but lets say 1 bar with higher high and higher low than the previous bar that in itself wouldn't be an uptrend or would it?

Technically, yes, since most of those bars represent a swing point at a smaller bar interval. Price is rising; therefore, the trend is up whether the uptrend provides convenient pauses for you to enter or not.

Ah so look at this link http://www.babypips.com/images/chart-types/uptrend-downtrend-chart-lg.gif

The specific parts are labelled as uptrends and downtrends but it can also be said that the entire chart is an overall uptrend right? Or is that incorrect?

When people say dont trade against the trend would they mean on the chart above, aginst the overall trend on that chart (which is upwards) or against the smaller trends within it.

For example lets say you were trading at the time of that chart and you were in one of the downtrends but obviousally as the entire chart is trending upwards would you be trading with the trend if you went long or short?


Thanks alot
Best Regards

Thanks alot

You're making a mistake common to beginners (and quite a few not-so-beginners), i.e., reading the chart from right to left, in hindsight, rather than left to right, which is what you'd be doing in real time.

If you're in the trade -- or thinking about getting into it -- at the far left of the chart, you don't know when the uptrend is going to taper off, consolidate, or even reverse. If it does appear to reverse, you don't know if that pullback is just a retracement before a continuation or a reversal of the trend. Therefore, you have to know exactly what signs you will look for that will prompt your exit. You also have to decide exactly what signs you'll look for to determine whether or not you are thereafter in a new trend, down. And since you have no way of knowing how long that trend will last, you again have to plan your exit ahead of time and decide what to do next depending on what the market throws at you, i.e., you don't know at the time whether or not there will be several alternating trends, how long they'll be, how many there'll be, and so on.

Which is why you need a trading plan (see Trading Journals, below).

Db
 
Hi


Thanks alot everyone very interesting replies, as to the book thing, im looking to get a few good books now. Here is my list im trying to pick say 2-3 from:

Kathy liens book- Should i get this it looks a good beginners book, but it sure is expensive and fairly thin.


COME TO MY TRADING ROOM, BY Dr Alexander Elder - Maybe later on, or would this be a good beginner book?


Technical analysis for dummies- Seems nice and cheap, saw it recommened here may aswell get this one.


Can anyone give me feedback on the three listed or recommend a good beginner day trading/forex trading book.


Thanks alot
 
I suggest you avoid books entirely for the time being, but I'll most likely be the lone voice in that regard. :)
 
dbphoenix said:
I suggest you avoid books entirely for the time being, but I'll most likely be the lone voice in that regard. :)

Lol so you think it will actually be detrimental to learning to read books before studying the charts.

I got metatrader and you can actualoly go back in time on it so ive been looking through mainly the cable, i think ill have a play round with indicators in the past and see how the market reacted after looking at indications given.

Thanks alot
 
tomhunter said:
Lol so you think it will actually be detrimental to learning to read books before studying the charts.

I got metatrader and you can actualoly go back in time on it so ive been looking through mainly the cable, i think ill have a play round with indicators in the past and see how the market reacted after looking at indications given.

Thanks alot

I wouldn't ignore books if I was a beginner. Anyone who says ignore books before you start trading I would ignore their advice. The whole advancement of humanity is based on writing and reading knowledge.

Read books and listen to people and do what is right for you.

Before engaging in discussions you need the basics which most traders would concur with.

Strongly recommend;

Technical Analysis of the Financial Markets by John J Murphy for essential grounding...

High Probability Trading by Marcel Link for psychological insights of traders...

Both books were recommended to me by traders in the City.

Obviously there are many more with more detail and better analysis but for starters it would be beneficial to you imo. I have gone back to read them many a times having read them from cover to cover.
 
tomhunter said:
Lol so you think it will actually be detrimental to learning to read books before studying the charts.

I got metatrader and you can actualoly go back in time on it so ive been looking through mainly the cable, i think ill have a play round with indicators in the past and see how the market reacted after looking at indications given.

Thanks alot

Actually, yes. I've worked with beginners for a number of years now, and the amount they have to unlearn is far greater than anything they've learned that is of value. To a large extent, this is due to the fact that most writers of books have an agenda of some sort, e.g., a "system" or "strategy" they want to push (you may find their names attached to certain patterns or strategies). But there's also the fact that the beginner doesn't know very much (if he did, he would likely not be reading all these books).

On the other hand, the material that is available from the professional organizations such as the CME, or CBOT, or NYSE or whatever are really quite good. They won't tell you at what price to buy GE, but they'll explain the basics. The Wall Street Journal used to put out a very good "book" for beginners and may still do so.

But watching price move in real time will at least give you a better idea of what questions to ask. If you're told what to look for going in, then you will already have formed a bias, and if that bias turns out to be inaccurate, you'll find it more difficult to get rid of than herpes (or so I've heard).

As to the indicators, again, no, or at least not until you have some sense of how price moves under varying sets of conditions. If you're in a hurry, you can follow somebody else's system with their indicators and their patterns and their whatever, and you might find success with all of this. But I wouldn't bet on it.

Db
 
dbphoenix said:
Actually, yes. I've worked with beginners for a number of years now, and the amount they have to unlearn is far greater than anything they've learned that is of value. To a large extent, this is due to the fact that most writers of books have an agenda of some sort, e.g., a "system" or "strategy" they want to push (you may find their names attached to certain patterns or strategies). But there's also the fact that the beginner doesn't know very much (if he did, he would likely not be reading all these books).

On the other hand, the material that is available from the professional organizations such as the CME, or CBOT, or NYSE or whatever are really quite good. They won't tell you at what price to buy GE, but they'll explain the basics. The Wall Street Journal used to put out a very good "book" for beginners and may still do so.

But watching price move in real time will at least give you a better idea of what questions to ask. If you're told what to look for going in, then you will already have formed a bias, and if that bias turns out to be inaccurate, you'll find it more difficult to get rid of than herpes (or so I've heard).

As to the indicators, again, no, or at least not until you have some sense of how price moves under varying sets of conditions. If you're in a hurry, you can follow somebody else's system with their indicators and their patterns and their whatever, and you might find success with all of this. But I wouldn't bet on it.

Db


Thanks alot, btw that "lol" was at your comment on being alone not at the advice.

Thanks
 
dbphoenix said:
As to the indicators, again, no, or at least not until you have some sense of how price moves under varying sets of conditions. If you're in a hurry, you can follow somebody else's system with their indicators and their patterns and their whatever, and you might find success with all of this. But I wouldn't bet on it.

Db

Thanks alot for the advice again dp, so if i dont use indicators to study price movements. What do i look out for when looking at the price movements, what conditions.

Thanks

PS. Sorry if you've said this already but i just don't fully understand what to look for.
 
Atilla said:
I wouldn't ignore books if I was a beginner. Anyone who says ignore books before you start trading I would ignore their advice. The whole advancement of humanity is based on writing and reading knowledge.

Read books and listen to people and do what is right for you.

Before engaging in discussions you need the basics which most traders would concur with.

Strongly recommend;

Technical Analysis of the Financial Markets by John J Murphy for essential grounding...

High Probability Trading by Marcel Link for psychological insights of traders...

Both books were recommended to me by traders in the City.

Obviously there are many more with more detail and better analysis but for starters it would be beneficial to you imo. I have gone back to read them many a times having read them from cover to cover.

Thanks alot ive added them to my list, i had already seen high probility trading but now its a prority :)

Thanks
 
tomhunter said:
Thanks alot for the advice again dp, so if i dont use indicators to study price movements. What do i look out for when looking at the price movements, what conditions.

Thanks

PS. Sorry if you've said this already but i just don't fully understand what to look for.

Sounds like you're going to take the book route. I suggest you explore all of that and get back to me at some later date if you're still interested.

Db
 
You won't find much crap in Techniques of Tape Reading by Graifer & Schumacher (in fact it might steer you around a lot of stuff you actually don't need to read) and if you request it at your local library you'll find they can get it as they bought it for me (rule no1 never spend your money when you can find someone who's willing to spend theirs for you ;) ) , although if you request it that means I'll have to give it back ;( ..markets being fractal you can look at what's in there in any timeframe if you don't feel like trading intraday (although you won't be able to level 2 tool the same) ..take what you find in there and just look at charts and then you really do need to read also about money management and that should do it.
For the record most people have to find what they need by reading an awful lot of what they don't need first ,but it doesn't have to be that way ..trust me ...dib dib
 
chump said:
You won't find much crap in Techniques of Tape Reading by Graifer & Schumacher . . .

I'll agree on that one. It's one of the books on my recommended list.

Db
 
Hi TH

I'd recommend at least one book covering Technical Analysis. The one that I've read is by Leigh Stevens called "Essential Technical Analysis". I'd also read the market wizard books so that you learn about how the top traders blew up their account at the beginning of their trading career.

It's one thing to master TA but if you can't do money management, you will blow up your account. You also need to do the essential boring stuff like writing a trading plan(s), backtesting your trading plan(s) etc.

F
 
dbphoenix said:
Sounds like you're going to take the book route. I suggest you explore all of that and get back to me at some later date if you're still interested.

Db

Im going to study the markets first, im just making a list a worthwhile books.

Thanks
 
fibonelli said:
Hi TH

I'd recommend at least one book covering Technical Analysis. The one that I've read is by Leigh Stevens called "Essential Technical Analysis". I'd also read the market wizard books so that you learn about how the top traders blew up their account at the beginning of their trading career.

It's one thing to master TA but if you can't do money management, you will blow up your account. You also need to do the essential boring stuff like writing a trading plan(s), backtesting your trading plan(s) etc.

F

I'd agree Money Management rules TA.

You have 50/50 chance of getting a market move right. Think about it - up or down (not counting sideways moves). Even a monkey can be trained to push buttons looking at trends and being rewarded by bananas.

I'd also google System Expectancy ratios.
 
dbphoenix said:
I'll agree on that one. It's one of the books on my recommended list.

Db

Speaking of Vad and Chris (name-dropping), Bo Yoder, who is also connected with realitytrader.com, has posted a new video presentation to the Knowledge Lab which may help explain what I mean by learning to read charts without indicators and so forth, i.e., listening to what traders are telling you by how and when they move price.

Db
 
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