Age old debate. What is your definition of a trend? | Forex Factory

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Age old debate. What is your definition of a trend?

  • #1
  • First Post: Jul 11, 2010 10:15pm Jul 11, 2010 10:15pm
As the topic suggests, I would like to ask a lot of you what is your definition of a trend. I'm hoping to find out the following:

1)At what point do you decide when a trend has started.
2)How do you decide that the trend is about to end.
3)How do you decide that the trend is sideways.

Please do include your reasons. It would probably include information like indicators used, time frame, PA. If you are a fundamentalist, please explain how you determine the trend.

I do not mind if you are a scalper or long term trader. I want to know how you determine your trend. My guess is the people making money are very good at determining trends and I would like to learn a few things.

If you can post pictures even better

Thx and regards.
  • #2
  • Jul 11, 2010 10:56pm Jul 11, 2010 10:56pm
From a fundamental point of view it's easy, interest rate diffential makes for a decent trend measurement. Ex: GBP/AUD, AUD has high interest and GBP has low interest, so people borrow GBP and lend AUD (Sell GBP and buy AUD), therefore, GBP/AUD goes down. Go check a weekly chart and see what I mean .
“Nothing great in the world has ever been accomplished without passion.”
  • #3
  • Jul 12, 2010 4:42am Jul 12, 2010 4:42am
I would say the start of a trend is determined by :

Uptrend higher highs and higher lows

Downtrend lower lows and lower highs.
  • #4
  • Jul 12, 2010 4:52am Jul 12, 2010 4:52am
Quoting Dutch_trader
I would say the start of a trend is determined by :

Uptrend higher highs and higher lows

Downtrend lower lows and lower highs.
what time frame?
  • #5
  • Jul 12, 2010 5:26am Jul 12, 2010 5:26am
theres got to be a reason why they call a trendline a trend line.
bull in a china shop
  • #6
  • Jul 12, 2010 5:27am Jul 12, 2010 5:27am
Quoting Deevz
From a fundamental point of view it's easy, interest rate diffential makes for a decent trend measurement. Ex: GBP/AUD, AUD has high interest and GBP has low interest, so people borrow GBP and lend AUD (Sell GBP and buy AUD), therefore, GBP/AUD goes down. Go check a weekly chart and see what I mean .

...and when carry trade unwinds..... ie super trend on yen pairs is against the interest rate differential.
bull in a china shop
  • #7
  • Jul 12, 2010 5:29am Jul 12, 2010 5:29am
Not my definition, but those of a pro trader who had his own thread on FF.

Swing high :-
A bar preceded and succeeded by lower highs.

Swing low :-
A bar preceded and succeeded by higher lows.

Trend change to bullish :-
LL - LH - HL - HH

Buy at next higher low ( ie. pullback of an ABC correction )

Trend change is confirmed by the break and close above the previous swing high.

Reverse for bearish price sequence.

Sideways price action :-

Lower highs and higher lows ( or combination thereof ) within the previous high low range.
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Never underestimate an idiot.
  • #8
  • Jul 12, 2010 5:41am Jul 12, 2010 5:41am
Quoting uncle gromit
Not my definition, but those of a pro trader who had his own thread on FF.

Swing high :-
A bar preceded and succeeded by lower highs.

Swing low :-
A bar preceded and succeeded by higher lows.

Trend change to bullish :-
LL - LH - HL - HH

Buy at next higher low ( ie. pullback of an ABC correction )

Trend change is confirmed by the break and close above the previous swing high.

Reverse for bearish price sequence.

Sideways price action :-

Lower highs and higher lows ( or combination thereof ) within the previous high low range.
How many bars does it take for you to determine a swing high or low?
  • #9
  • Edited 6:10am Jul 12, 2010 6:04am | Edited 6:10am
Trend: An action or belief in which the majority are partaking
Time hides Nothing
  • #10
  • Jul 12, 2010 6:16am Jul 12, 2010 6:16am
My definition of a trend is: two or more points (Higher High or Lower Low) and a trend continuation.

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GbpUsd Weelkly
  • #11
  • Jul 12, 2010 6:24am Jul 12, 2010 6:24am
Quoting Musashi
How many bars does it take for you to determine a swing high or low?
Just 3.

If you know where price is in the sequence then you know when to buy the dips or sell the rallies.

4hour USD/CHF in progress.
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  • #12
  • Edited 6:42am Jul 12, 2010 6:29am | Edited 6:42am
For me a trend is something I can trade of, any TL on a higher TF that is respected more then twice is tradeable on a lower TF. So if I can identify a downtrend on H4 and the H1 is showing me an uptrend, I don't trade that pair and wait for H1 to either realign itself with H4 giving me a corresponding trend to trade or I scale down to M30, if that corresponds to H1 then I can trade the trend within the trend.
  • #13
  • Jul 12, 2010 6:48am Jul 12, 2010 6:48am
since you mention about indicators ..... Here is One which does a fine Job in spotting the sentiment of Market.

I can also give examples of +78765300 differnt indicators which does the same thing. They all seem working fantasic. But where.... "in the middle of Chart".

The thing is can you make your decision using this Looking at the Right edge of the Chart... Is it really possible for me or You. don't bother answering me this.. coz I know.


However even if a smart Butt is able to recogonise about the trend using no matter what. Its not enough. AtLeast I don't think so. The age Old theoary fo Your's age Old debate still remains true. "Higher High and Higher Lows". very simple and very straight forward.


After the trend is worked out. One need to find out the kind of momentum associated with the current Trend. what one should use for spotting momentum. Of course Indicators.... which has been used and had been abused by almost everyOne.

we need momentum because just finding the trend is not the end. a trend could be down but then experiencing an upward swing. or lets say its current Bias is up. trend and Bias are two different things.

It doen't matter wheather indicators works or Not.. what matters is How someone's use It. have a look at chart plotted with Adx (my fav momentum indicator) .

I use these for reading the sentiment of market and to gauge that If there is a reliable trade setUp. If there exist One, I close everything and use only fractals for adding positins and stopLoss.

Final Note: there is a time for Trading and time for fishing. If you don't find things Lined up..... invest your time in something else.. If fishing doesn't appeal.. then maybe a date.
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  • #14
  • Jul 12, 2010 6:52am Jul 12, 2010 6:52am
OMG !

another thread in the same topic

unbelievable ..
  • #15
  • Jul 12, 2010 7:02am Jul 12, 2010 7:02am
Quoting benssol
OMG !

another thread in the same topic

unbelievable ..
Think of it more as a survey than a discussion about the mechanics and nitty gritty. I'd just like to see what everyone is using and how they are using it.
  • #16
  • Jul 14, 2010 4:33pm Jul 14, 2010 4:33pm
Quoting thelws
1)At what point do you decide when a trend has started.
2)How do you decide that the trend is about to end.
3)How do you decide that the trend is sideways.
1) Price breaks (or better still, closes) above a prior significant high, or below a prior significant low. Sorry, this is probably too mathematically vague to be helpful, but 'significant' is largely discretionary: for me, it depends on timeframe, prior S/R (salience, confluence), supply and demand (congestion) zones, and (a recent addition to my analysis toolbox) some volume analysis.

2) This is more difficult. Again, S/R, candle patterns (buying/selling pressure), climax volume, current daily move relative to average daily/session ranges....... these can all give clues that a reversal may be imminent, but they are only clues.

3) The inverse of (1). Price continues to move within the range of the last prior significant high and low.

Anyway, that's just my approach. "Trend" is perhaps the most subjective concept - in terms of a mechanical definition - in trading.

If you're looking for a mechanical definition, Bytebodger discusses an ingenious way here. And FXEZ has detailed some very interesting ideas here.

[EDIT] Benssol is correct. Use the FF search engine to look for threads in the Trading Discussion that have the word "trend", and you'll find several "How do you define a trend?" type threads, with ideas that might help you.
  • #17
  • Last Post: Jul 14, 2010 5:08pm Jul 14, 2010 5:08pm
Good post Hanover,

I like Bytebodger's simple approach to defining change.

Another that is good is the concept of period changes. As with the turtle method when your high beats the X period high you get a probable period change. A more recent and more sophisticated approach (which you also see hints of in old breakout methods) says that time conditions the potency of the move so you break the line count but then price must be maintained above it for Y periods unless certain very strong breakout conditions are met.

So, say your period is defined by 40 periods and your conditioning factor is 10. A change from up to down occurs if your close breaks the low of the last 40 periods and then holds below that point for X of the next 10 periods thus confirming potency of the change.




Quoting hanover
1) Price breaks (or better still, closes) above a prior significant high, or below a prior significant low. Sorry, this is probably too mathematically vague to be helpful, but 'significant' is largely discretionary: for me, it depends on timeframe, prior S/R (salience, confluence), supply and demand (congestion) zones, and (a recent addition to my analysis toolbox) some volume analysis.

2) This is more difficult. Again, S/R, candle patterns (buying/selling pressure), climax volume, current daily move relative to average daily/session ranges..........
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