ive been looking into the ideal ways to discern whether the market is in a trending mode, volatile trading range, or flat sideways and also to show the strength of the trend. id like to use different strategies and indicators for each different mode of the market in my system. ie use trading range indicators while market is volatile and whipsawing around, and then if/when a trend develops jump in with more positions and shift exit to suit the trend. this would accommodate the never miss the trend rule and still allow for nice smaller pops during trading range activity.
so far i have experimented with a number of indicators and possible ways to go about this. i noticed several members posting codes with trend ribbons based on price above or below long MA, a +- DMI and/or ADX, in relation to Signal/MACD, and numerous other methods. the ones i have looked at seem to have major shortcomings and are inaccurate to large degree.
so far the most novel and interesting indicator ive found for this application is David Sepiashvili's Trend Quality indicator as discussed in April 2004 TASC
im currently making a trend filter combining several outputs using this indicator, one for current stock and also for a broad index such as Nasdaq to determine trend and strength. so far the experimental results look promising and will continue working with this concept.
im curious as to what other members of the forum are using to define trending modes and wondering if you have any further suggestions on ways to discern the various intricacies of the different market modes?
perhaps also further discussion about what types of indicators and strategies work best for each mode would be interesting topic.