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Determining Trending vs. Consolidating

  • #21
  • Jan 9, 2009 2:34am Jan 9, 2009 2:34am
what timeframe?
this is the question, a market can be in trending mode in the hourly chart and consolidated in the dailies..
it depends.

Also I think It's hard to be programmed, as it depends on pattern recognition by human eye as shown in bunton's chart.

and if u managed to identify it, u will face another problem.
is it an accumulation/distribution or it's a range where continuation of trend will follow!

Regards
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  • #22
  • Jan 9, 2009 6:11am Jan 9, 2009 6:11am
  •  MPP
  • Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
a daily chart can be in a down trend while a 1h chart can be in an up trend, which is in effect a retacement of the daily chart, so i would suggest that first you decide the reason and TF you want to use or decide is the target chart, then review the trade rules and set the trend indicator according to this. Ie if you only trade the Daily chart then you could use the 200ema - buy above, sell below, this could be programmed as a simple 2 ma or 3ma identifyer, such as using the 5ma, 10ma and the 200ma, when inline trade.

As posted before these can be multiplied and reflected on lower Tf also.
  • #23
  • Jan 9, 2009 11:39am Jan 9, 2009 11:39am
Why don't you just let a given strategies performance tell you what the market is doing?
The breaking of a wave cannot explain the whole sea.
  • #24
  • Jan 9, 2009 12:10pm Jan 9, 2009 12:10pm
is Vertical Horizontal Filter indicator useful to determine the market is trending or consolidating??
  • #25
  • Jan 9, 2009 2:38pm Jan 9, 2009 2:38pm
Quoting Craig
Why don't you just let a given strategies performance tell you what the market is doing?
I do =D
My trading strategy involves turning EAs on and off based on how I perceive the market. I'm trying to remove me from the equation and come up with a mathematical way to determine trending/ranging. The ultimate goal I see for myself in forex is to have a super EA of sorts which combines the entry and exit strategies of the 37 systems I trade. And turn systems on and off based on whether or not the market is trending or ranging.

Will it be perfect? No, I doubt it, but as I see it, it just brings me one step closer to automating my trading. Do I ever expect to fully automate my trading? No. But I figure I can automate it enough where I don't have to be analyzing the market every 5 minutes. Once an hour would be nice.
  • #26
  • Jan 9, 2009 4:42pm Jan 9, 2009 4:42pm
Ronnie,

There is a simple indicator called "super trend" that measures the most extreme price over the past 9 time frames (of what ever chart its on). If price fails to make a new high (or low) it runs flat...giving you and indication of consolidation. I price makes a new high (or low), the line moves in the direction of price indicates. If price closes above the line the trend is said to favor longs, and if price is closing below, the trend is said to favor shorts.

Its really a reword of the Tenkan Sen line of an Ichomoku chart, but it is very good at indicating what your looking for and can be easily incorporated into your program with an icustom() line.

I have attached it here for your review...enjoy...if you need help using it just let me know.
  • #27
  • Jan 9, 2009 4:46pm Jan 9, 2009 4:46pm
This time with the file...hope this helps
Attached File(s)
File Type: ex4 Supertrend.ex4   3 KB | 689 downloads
  • #28
  • Jan 9, 2009 5:45pm Jan 9, 2009 5:45pm
  •  krue
  • | Joined Mar 2008 | Status: finger scares cat, power of illusio | 410 Posts
actually, you are providing a good solution. when the ranging market becomes obvious, the breakout is on its way shortly, it is worthwhile to anticipate the trend for an early entry. however, the problem seems not easy to determine the direction unless he can program the robot to assess the price's relative position in the chart for a probabilistic evaluation of the potential breakout point. maybe, the intelligent agorithem can be trained on this based on historical data series.

Quoting willf
I don't see how you can determine something that has not happened.

By the time a trend becomes a trend and you can see it visually you have already missed the move. Like wise consolidation is only apparent after it has moved between two definable points several times.
  • #29
  • Jan 11, 2009 4:40am Jan 11, 2009 4:40am
Quoting Ronald Raygun
My trading strategy involves turning EAs on and off based on how I perceive the market.
What if you let the on/off be based on how your EAs' equity curves reveal the market.

Run 6 demo accounts full time, one for each set of EAs (I read somewhere you have 6 sets based on 6 different market conditions). Then look at the equity curve of each demo like an oscillator. Check the demo performance every hour and make decisions based on the oscillations of demo equity, not market data.

Or would this lag too much?

VBro

PS - If this works, throw me a bone, will ya, boy wonder!
  • #30
  • Jan 11, 2009 4:48am Jan 11, 2009 4:48am
Look back X bars, and if the range is greater than Y pips, it is trending.



Of course we both live in the real world, right Ron? And that means that this whole idea of figuring out whether it "is" trending or "is" congesting is impossible.


You're only as certain as your last tick.
  • #31
  • Mar 21, 2009 8:43am Mar 21, 2009 8:43am
Quoting Ronald Raygun
As a trader, I have the hardest time trying to determine accurately whether or not a market is trending or consolidating. Because I have a strategy that optimizes each.


From a programming point of view, it gets even harder.


How do you all quantify whether or not a market is uncertain? (Moving sideways)
How about rate of change of a moving average? Moving Average Smooths price. The higher the rate of change of the moving average the better the trend.
  • #32
  • Mar 21, 2009 12:30pm Mar 21, 2009 12:30pm
Quoting Musashi
How about rate of change of a moving average? Moving Average Smooths price. The higher the rate of change of the moving average the better the trend.
It's a nice thought, but it doesn't tell me the present condition. The best solution I came across is now in the dynamic colors thread.
  • #33
  • Mar 21, 2009 1:19pm Mar 21, 2009 1:19pm
50 movin average....upwards=uptrend / downwards=downtrend / sideways=range
Fear's for the other guy
  • #34
  • Mar 21, 2009 4:07pm Mar 21, 2009 4:07pm
  •  zykas
  • | Joined Oct 2008 | Status: ... measure thrice, but cut once | 196 Posts
Quoting willf
I don't see how you can determine something that has not happened.

By the time a trend becomes a trend and you can see it visually you have already missed the move. Like wise consolidation is only apparent after it has moved between two definable points several times.

Agreed! How do we then catch a trend earlier to be in advantage?
I like the Big Dogs because I trade like them
  • #35
  • Mar 21, 2009 7:10pm Mar 21, 2009 7:10pm
The breakout from a range bound condition is less reliable than the breakout from a trending condition. If market breakout at the range top, then fall back below the top level, this kind of behavior always reminds me a bull trap.
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  • #36
  • Mar 21, 2009 7:16pm Mar 21, 2009 7:16pm
There are a lot of ways you can do this. You can use an efficiency ratio if you're into indicators. Or you can simply set boundaries and wait for price to breakout and pullback. Are you looking for intra-day trends or something larger?
  • #37
  • Edited 8:15pm Mar 21, 2009 7:49pm | Edited 8:15pm
Quoting zykas
Agreed! How do we then catch a trend earlier to be in advantage?

That is not the idea if you are a trend follower trader.

Catching a Breakout of a Range Bound Market is tricky at best.

Take a look here for some ideas. http://www.forexfactory.com/showthread.php?t=155544

To trade a trend there must be an existing trend in place.

The best way to identify if there is a trend in place in my opinion is to look at the rate of change of a long term moving average.

Price has momentum or it doesn't. The greater the momentum the greater the chance that price will continue with that momentum. Obviously when price has no momentum the likelyhood of it being rangebound is obviously greater.
  • #38
  • Last Post: Jun 27, 2009 1:23pm Jun 27, 2009 1:23pm
Definition of a trend is?

this varies but for me i always ask in what time frame
i could show you a chart where the prices start in the bottom lhs and move in a nice tight channel up to the top rhs.
are you excited yet?
well don't be because yes it is trending but those bars are 10sec bars.
so first you need to define your time frame
the markets are very good at deceiving but i like the idea of choosing a time period first
lets say the last 3 days
now use the 1 hr bars and fit a simple linear regression to it. You have reduced all of that data to a line and you can call the slope of the line the trend strength.
steve
Don't kill your dreams - execute them.
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