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how to handle trend change?

  • #1
  • First Post: Jul 14, 2007 10:13pm Jul 14, 2007 10:13pm
hi

as many of you know.. some method works on trending but don't on ranging... some works on ranging but don't on trending.
so any recommendation on how to handle when a trends end and changing to ranging?? or the other way round??

regards
  • #2
  • Jul 14, 2007 10:50pm Jul 14, 2007 10:50pm
Quoting SynWind
hi

as many of you know.. some method works on trending but don't on ranging... some works on ranging but don't on trending.
so any recommendation on how to handle when a trends end and changing to ranging?? or the other way round??

regards
That's simple: when price is trending, ma crossovers will do; when price is ranging - channels. The problem is to recognize the start of a trend or a range. In many cases it depends on what t/f you are watching, so depend on a bigger t/f. One cannot be accurate all time, but mostly the bigger t/f the stronger trend and the range is usually within that trend.

Sounds easy, doesn't it?

Cheers,
Lietuve
  • #3
  • Jul 14, 2007 10:53pm Jul 14, 2007 10:53pm
Quoting SynWind
hi

as many of you know.. some method works on trending but don't on ranging... some works on ranging but don't on trending.
so any recommendation on how to handle when a trends end and changing to ranging?? or the other way round??

regards
I dont know what system you are using but the method I'm using now usually make small profit/loss in ranging market but big profit in trending market. There's no need to assume when the market will change from ranging to trending. The method is somewhat automatic.
  • #4
  • Jul 14, 2007 11:09pm Jul 14, 2007 11:09pm
I trade primarily G/U and use MA channels to trade both range and trend.

I am not at my main trading computer right now but if you are interested I can post a chart pic later. Even with good indicators, it takes some skill to see when the market is switching from trend to range.

Sometimes price doesn't range sideways but ranges slightly down or slightly upward. Some traders might call this a weak trend.

Other than knowing your indicators inside and outside I would say knowing the characteristics of your main trading pair(s) is very important.

Thanks,
  • #5
  • Jul 15, 2007 12:42am Jul 15, 2007 12:42am
i am still learning and exploring a system for trading FX. so far..i find that a trending method hit ranging..like trading MA..you will get into problem...so was wondering if there a way to handle it.
care to share what your system works?

Quoting luqmanz
I dont know what system you are using but the method I'm using now usually make small profit/loss in ranging market but big profit in trending market. There's no need to assume when the market will change from ranging to trending. The method is somewhat automatic.
  • #6
  • Jul 15, 2007 12:44am Jul 15, 2007 12:44am
i am looking primarily G/U too.. they has so big movment some time... really don't know how to handle that. :


Quoting KudzuFX
I trade primarily G/U and use MA channels to trade both range and trend.

I am not at my main trading computer right now but if you are interested I can post a chart pic later. Even with good indicators, it takes some skill to see when the market is switching from trend to range.

Sometimes price doesn't range sideways but ranges slightly down or slightly upward. Some traders might call this a weak trend.

Other than knowing your indicators inside and outside I would say knowing the characteristics of your main trading pair(s) is very important.

Thanks,
  • #7
  • Jul 15, 2007 2:15am Jul 15, 2007 2:15am
Hi Lugmanz,

Kindly post your trading system.

thanks and best regards,

Vasudevamurthy.N
  • #8
  • Jul 15, 2007 2:21am Jul 15, 2007 2:21am
Quoting SynWind
i am still learning and exploring a system for trading FX. so far..i find that a trending method hit ranging..like trading MA..you will get into problem...so was wondering if there a way to handle it.
care to share what your system works?
This is the method. Good luck.

http://forexfactory.com/showthread.php?t=27286
  • #9
  • Jul 15, 2007 12:17pm Jul 15, 2007 12:17pm
Quoting SynWind
i am looking primarily G/U too.. they has so big movment some time... really don't know how to handle that. :

Those big movements are characteristic of G/U. You can get burned if you don't know how to handle G/U. Even when this pair is ranging it has wide swings.

I would say do all the reading you can about this pair's characteristics. Each pair has its own characteristics. That can help alot in fitting your trading style to the pairs you trade.
  • #10
  • Jul 15, 2007 8:19pm Jul 15, 2007 8:19pm
many thanks for your good advise.

Quoting KudzuFX
Those big movements are characteristic of G/U. You can get burned if you don't know how to handle G/U. Even when this pair is ranging it has wide swings.

I would say do all the reading you can about this pair's characteristics. Each pair has its own characteristics. That can help alot in fitting your trading style to the pairs you trade.
  • #11
  • Jul 15, 2007 9:06pm Jul 15, 2007 9:06pm
My advice: stick to a method of trading that will work well in some conditions but when unfavorable conditions present themselves you do not end up giving back all your profits (however, this can usually be resolved through good money management)

See the problems lies in the fact you never know WHEN a market will range or trend and by the time you can tell a market is ranging or trending the market conditions are usually about to change (the more obvious it is, the more likely a change is about to occur). If there was a way to tell in advance we could just use simple MA cross over systems and become very very rich.. but unfortunately life is not that easy

So, just develop or find a method that you like which will make you keep you from going broke during those unfavorable times and make you money in the long run

Hope this helps

Quoting SynWind
hi

as many of you know.. some method works on trending but don't on ranging... some works on ranging but don't on trending.
so any recommendation on how to handle when a trends end and changing to ranging?? or the other way round??

regards
  • #12
  • Jul 16, 2007 3:53am Jul 16, 2007 3:53am
thanks for your advice! you are right.. it might not even be possible to notice the change until too late. may be have to work on a good Money Management.

any one got good money management to recommend? i am not talking about the simple one that say do not risk 2%..etc.

Quoting superdezign
My advice: stick to a method of trading that will work well in some conditions but when unfavorable conditions present themselves you do not end up giving back all your profits (however, this can usually be resolved through good money management)

See the problems lies in the fact you never know WHEN a market will range or trend and by the time you can tell a market is ranging or trending the market conditions are usually about to change (the more obvious it is, the more likely a change is about to occur). If there was a way to tell in advance we could just use simple MA cross over systems and become very very rich.. but unfortunately life is not that easy

So, just develop or find a method that you like which will make you keep you from going broke during those unfavorable times and make you money in the long run

Hope this helps
  • #13
  • Jul 16, 2007 5:24pm Jul 16, 2007 5:24pm
Quoting SynWind
hi

as many of you know.. some method works on trending but don't on ranging... some works on ranging but don't on trending.
so any recommendation on how to handle when a trends end and changing to ranging?? or the other way round??

regards
Hers what I use.
800 sma
200sma
62 ema

If the 800 is below the 200, which is below the 62, the pair is trending up.
If the order is inverted, trending down.
If the 62 is between the 800 and the 200 the pair is no longer trending.
If the candles touch the 800, the pair is no longer trending.
If the pair is not trending, look for divergence trades (demo this first).
To find divergence add a stoch, and a MACD histogram, standard defaults will do.
Draw a trend line connecting the highs on the candles. Now draw a line on the highs of the stoch OR the MACD. Make sure you use the exact same times. If the line on the candles is sloping up, and the line on the stoch or macd is sloping down you have divergence. Go with the slope of the stoch or macd.
The above applies to bottoms as well.

Another thing to look for is a breakout.
Sometimes when a trend is coming to an end, the candles sort of flat line.
Staying in a very narrow range. Draw lines connecting the lows and a line connecting the highs. wait for a break-out.
If the lines are sloping towards each other, the candles will get more compresed as they reach the narrow end of the funnel you have just drawn. If one of the lines has a steeper slope than the other, look for a breakout in that direction.
A basic understanding of candles goes a long way too.
You can look for things like kangeroo tails etc.
This works for me. I am happy with 60-80 pips a week.
I am not going into stops. I assume you use good money mgmt with your trend trading.
chris
  • #14
  • Jul 16, 2007 5:26pm Jul 16, 2007 5:26pm
  •  vrama
  • | Joined Dec 2006 | Status: BE at right place@right time = LUCK | 210 Posts
Quoting Mysticdiver
Hers what I use.
800 sma
200sma
62 ema

If the 800 is below the 200, which is below the 62, the pair is trending up.
If the order is inverted, trending down.
If the 62 is between the 800 and the 200 the pair is no longer trending.
If the candles touch the 800, the pair is no longer trending.
If the pair is not trending, look for divergence trades (demo this first).
To find divergence add a stoch, and a MACD histogram, standard defaults will do.
Draw a trend line connecting the highs on the candles. Now draw a line on the highs of the stoch OR the MACD. Make sure you use the exact same times. If the line on the candles is sloping up, and the line on the stoch or macd is sloping down you have divergence. Go with the slope of the stoch or macd.
The above applies to bottoms as well.

Another thing to look for is a breakout.
Sometimes when a trend is coming to an end, the candles sort of flat line.
Staying in a very narrow range. Draw lines connecting the lows and a line connecting the highs. wait for a break-out.
If the lines are sloping towards each other, the candles will get more compresed as they reach the narrow end of the funnel you have just drawn. If one of the lines has a steeper slope than the other, look for a breakout in that direction.
A basic understanding of candles goes a long way too.
You can look for things like kangeroo tails etc.
This works for me. I am happy with 60-80 pips a week.
I am not going into stops. I assume you use good money mgmt with your trend trading.
chris
Can you place one example chart please.
All things are difficult before they are easy.
  • #15
  • Jul 16, 2007 5:33pm Jul 16, 2007 5:33pm
I am setting up a trade now. It is not a divergence trade.
when I finish, I will look for a divergence trade. Tonight or tomorrow.
Chris
  • #16
  • Jul 16, 2007 8:36pm Jul 16, 2007 8:36pm
Quoting vrama
Can you place one example chart please.
Here is a divergence on the attached chart,AUD/NZD hourly, 7/10/07
Notice that the pair became divergent on 7/9 when the 62 crossed the 200.
On 7/10 the candles touched the 800.

The line on the high of the candles is sloping up,
the lines on the MACD and the Stoch are sloping down.
(you don't need to find divergence on both indicators, one is fine. The fact that you have divergence on both is a nice confirmation)
I would place an order entry, short, 10 pips above the close of the last divergent candle. In this case 1.1093
Stop loss would be 10-15 pips above a strong MA (the 800 is strong) or a recent high. In this case the candle pierced the 800 so I would have gone with 1.1140, 37 pips. With a possible loss of 37 pips I would like to see 60 pips profit. The entry triggered 2 hours later, and produced 60 pips 19 hours later. Another 6 hours would have produced 86 pips less spread.
I set my Rules when I place my order entry. I do not sit there and watch the trade (in this case I would have been sleeping as price spiked up a bit at 02:00 - 03:00 EDT) If I sat there and watched the trade I would be tempted to bail out with +21 pips. I could have said to my self "I can't complain, I'am up 21 pips". The bottom line is you need those extra pips to balance out the next loss.
A nice goal in this trade would have been the 200 sma. It didn't quite get there, but close. I have found, that the 800 and the 200 act as either a
barrier or a magnet, depending on the scenario. I have kept trades like this one open sometimes 3 or 4 days
If I am not trading divergence but say, trading with the trend (like I was last week and missed the above trade), I don't have a MA above price to shoot for. I would use a nice round number.
Chris


None of the above is to be considered a trade idea.
It is a description of how I find and trade divergence.
Attached Image (click to enlarge)
Click to Enlarge Name: andiver.jpg Size: 51 KB
  • #17
  • Jul 16, 2007 9:16pm Jul 16, 2007 9:16pm
The use of indicators like RSI and stochs are good for identifying trends...everytime it gets OB or OS means the trend is strong in either direction
  • #18
  • Jul 17, 2007 10:50am Jul 17, 2007 10:50am
many thanks for many trading bros advise. i need to do more study on this then.

Quoting jest1081
The use of indicators like RSI and stochs are good for identifying trends...everytime it gets OB or OS means the trend is strong in either direction
  • #19
  • Jul 20, 2007 11:11am Jul 20, 2007 11:11am
hi

just want to update everyone.. i did some research and found out that we can identify a ranging market(flat marktet) using Bollinger Band (BB). During a ranging market, the BB width will be small. Therefore during trending, the BB width would be big.

So when BB is small, i am going to trade using stochastic over bought and over sold signal.

And when BB is big, i am need to trade with a trending method. may be EMA line cross over.

for expert to comments
  • #20
  • Jul 20, 2007 11:34am Jul 20, 2007 11:34am
Take a look at James16's price action thread, you'll know exactly when a trend ends and a new one starts, without all those funky indicators and MA crosses.
Take a report.
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