Diversified Trend Trading Approach

Even Transtrend and Winton in the red in March and YTD.



http://www.automated-trading-system....ds-march-2018/

Nice mate. I am addicted to them :-)

Remember how we used to place our pending's in blue sky?. The reason that I dropped the use of Donchians about half way through this thread was based on my preference for determining blue sky in relation to market structure. I found that the blind use of a Donchian does encourage over-trading.

Now that we are using Donchian's again in this approach, I do so in the context of placing pending orders at the time of exiting my last trade by applying the Donchian 2000 at that time..........as we know that in taking that earlier trade we were operating on the principle of a breakout from a prior important market structure (being a significant swing high or low). These significant market structure inflection points are noticed on all timeframes (not just M30) and if a breakout occurs from these points (which we adjust for with our ATR), it is more than likely to possess significant *enduring* momentum. So in reality I am still using the Donchian 2000 but only at the time of the last trade.

Remember that given the element of discretion in this strategy we need to ensure that we avoid the propensity for human bias. In the backtest I set the pending entry for the next trade based on the major swing high/low of our prior trades exit plus an ATR offset. That pending line stays in force as an objective line of action for the future based on my interpretation of market structure at that point.

This achieves two things.
1) It ensures that there is a valid reason why this level is *important* for our breakout approach with momentum. It is the logic that is important here not the signal of the indicator itself. It ensures that we do not fall into the trap of trading in our estimated region of statistical noise;
2) It significantly reduces the propensity to over-trade which under discretion is a significant obstacle to overcome. The valid reason stays in force and ensures we do not attempt to second guess our strategy.


I hope that makes sense.

Definitely mate. GBPMXN has good momentum in the short term to convince me that momentum is most likely to be more enduring. The slope of your short term USDMXN SDC is less than the slope of your long term momentum. In fact it looks like momentum is deteriorating in strength.

hello!, never posted here but I used to standard deviation channels for trend identification, I belive there is a possible change in long term trend and market structure caused by USD strengthness this week

Hi M

Thanks for dropping in. The SDC is a great tool that when applied wisely can achieve so much in our niche of trend/momentum trading. Great to see how you are using it in trend determination.

The USD pairs are giving us a lot of joy at the moment on the M30 and I reckon you are on the money :-)

How do you communicate complex ideas to others? Here are a few tips from Taylor Pipes used by the intellectual giant and master educator.......Richard Feynman.




Do yourself a favour and get stuck into these. Watch your brain expand :-) C

A good intro series to risk adjusted returns. Enjoy C

USD seems accelerating... hmm....







we can forget about eur jpy long:

DIVERSIFICATION – WHAT MOST NOVICE INVESTORS MISS ABOUT TREND FOLLOWING

Hey Copernicus. Very sweet thread you got here!

Although I did not really read through the whole thread, I am very found of the concept of trend following which you introduced to me in our conversation on other threads.

I would like to thank you for bringing the concept of trend following to my awareness. I have started incorporating the idea of trend following into my trading style. While it is still too early to declare any changes in performance, it does give me confidence on psychological level to trigger my trades.

Keep posting great contents! I will be lurking around!

Cheers S. Great to see you as a part of this humble thread. I must admit I am gob-smacked at the moment with Hanover's departure....such a loss to this community....anyway....back to diversified trend following we go :-)

Here is how I handle grief. I turn the volume up on Shirley Bassey......have a good cry....and then take a teaspoon of cement :-)

Thank you for the explanation! Logic is good and all, but there will always be some earlier high/low so we could move our pendings further... we need to limit discretion as much as possible but according to logic of the approach. If someone would have bad day or heavy recent losses it would influence his pending orders' placement.... Less discretion means higher conviction, that following the rules will bring expected results. For me it is better to have quantified rules to stick to than to have a free choice of highs/lows. It helps with overtrading.

Remember how we tried to quantify this approach? Blue sky could be different for different people... So let's say Donchian 2000 unless there is recent narrowing of it, then look for..... or just go for Donchian 3000 to be sure we are not overtrading?

https://i.imgur.com/eZECFtt.png