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Trading with the trend

Discussion in 'Trading Strategies/Systems' started by pavilion103, Sep 28, 2011.

  1. pavilion103

    pavilion103 Well-Known Member

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    I often read a lot about trading with the trend and I have a couple of questions:

    1. What constitutes a change of trend (say, from downtrend to uptrend). I know this may be a little subjective. But what do people use? a higher bottom? a percentage movement from the bottom? accumulation in the background?

    2. Do people trade with trend filters? For example, only shorts while the ALL ORDS is in a downtrend as it is at the moment? Or only a certain percentage of longs allowed?
     
  2. Billyb

    Billyb Well-Known Member

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    1. Most of the pro trend traders Eg Ed Seykota, Bill Dunn etc would probably say a similar thing. They don't know where the trends gonna go, there is no way to tell, so the only option is to try them all. This is pretty much what trend traders do, just jump on every ride, most of them will run out of fuel quickly, but there'll be a few each year that run on rocket fuel - and those are the ones that make the money. So to answer your question, I don't think it's possible to tell when the trend will change.

    2. I think its a good idea
     
  3. tech/a

    tech/a No Ordinary Duck!

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    How do you profit without being in a trend?
    Even an Arb trade needs to revert either up or down to the equilibrium.
    It will have to move in a direction----trend.

    In any longterm trend there is counter trends
    An alteration to a trend maybe valid in one timeframe and not in another.
    Counter trends often move in the opposite direction to the primary trend.

    So firstly identify timeframe.
    As for change of trend the best thing I've found is a trendline
    But without timeframe you'll be at odds with which trend line to use.

    Billyb
    Is infact very right
    You don't know which trend is going to go and for how long.
    We see setups trend or counter trend as opportunities so we put ourselves in a position where we are on a trade and if it goes in our direction we profit.
    If we are good traders we will be on many of these move our stops to B/E as soon as we can and ride those we catch as long as we can.
    Being wrong becomes a good thing as we can set ourselves up on the next opportunity.
     
  4. Wysiwyg

    Wysiwyg Everyone wants money

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    I find it incredible that some stocks are banging up higher in this market. Some multi baggers. Vigorous buying while most stocks sell off. :confused:
     
  5. Gringotts Bank

    Gringotts Bank Well-Known Member

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    Yeh it's a bit different isn't it? A lot of them under 10c too.

    I think this has a lot to do with a guy called Fibonarchery on HC, with his shell plays. Very influential. 99.99% of these co's will never be worth anything, and yet with enough players, things move.
     
  6. tech/a

    tech/a No Ordinary Duck!

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    That's it!
    The new Renee Rivkin
    Brilliant.
     
  7. 11bblandin

    11bblandin Member

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    First I think you'd need to identify the time frame you'd want to look at. Then in that time frame find a way to describe what the market has done/ is doing, either by looking at highs/lows in that period, or through an indicator that describes where the current price is relative to the prices in that period, or by some other means (?). Ideally this time frame would be longer than the holding length of your trades (unless you mean to capture the entire trend move).
     
  8. shulink

    shulink Well-Known Member

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    You can use weekly chart to find trending stocks, and then use daily charts for entry points. It also depends on how long are you planning to hold the stocks. If you are a swing trader, you can use daily chart to find trending charts, and intraday chart for trade setups.
     
  9. Wysiwyg

    Wysiwyg Everyone wants money

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    That should have "perfectly acceptable" for me. A trading fact based on experience it is not.
     
  10. Trendnomics

    Trendnomics Well-Known Member

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    I can back this up with empirical evidence - see my system's thread for back-test results. I purposefully seek out higher volatility, given there is sufficient liquidity to support my large positions.
     
  11. Wysiwyg

    Wysiwyg Everyone wants money

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    Trend following win rates over time are consistent. That is something that is factual and something to feel confident about when those losers start mounting.

     
  12. Newt

    Newt Well-Known Member

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    Trend trading is definitely a proven way of trading over the long term. Brett Penfolds ("The Universal Principles of Successful Trading") does a great job of outlining what people should expect however. IIRC he says something like "trend trading is miserable". % win around 40-50% means you're constantly trying stocks to not miss out on those that continue to rise. Not so hard while things are going well, but you're generally in drawdown and only sometimes cashing in a low percentage of bigger winners.

    Howard Brandy and many others have commented on the risk in holding positions open over the medium to longer term.

    Damned Holy Grail! Its got be around here somewhere dammit! :D
     
  13. ryan11

    ryan11 Member

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    Trading with the trend means Momentum Trading where traders hold a position for few minutes or couple of hours depending upon how quickly stock moves. How do we figure out trend ? Traders use different measures to figure out trend
    Ӣ Focus on resistance, support or breakouts over a chart
    Ӣ You can use technical indicators like ADR, Fibonacci or ATR
    Ӣ A major News/ Economic event

    All these can help you in finding out trend as well earning profits through Day trading.
     
  14. minwa

    minwa Well-Known Offender

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    How does any of those indicators help you figure out the trend ??
     
  15. pettlepop

    pettlepop Active Member

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    The trend is your friend when its about reverse. TAKE A LOOK AT DCL she is ready to break its downward trend with a massive pop upwards!:D
     
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