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The concept of "trend" which I cannot grasp

  • #21
  • Sep 29, 2010 10:56am Sep 29, 2010 10:56am
Quoting Carnegie
Allright that's good information aswell, looking at higher timeframes.

But let me ask you something, if this is catch a falling knife (while I thought I was only continuing the trend) then what is continuing a trend?
Could someone please show a pictorial example? How should I buy "WITH THE TREND"?

Thank you

you dont know whether it remains a trend or not, therefore you enter when you know (with high certainty) it will continue (in the daily eurusd example long @ 1.3) there is no such thing as one trend, its a steady fluctuation between price discovery and consolidation/saturation with different timeframes dominating on different events (news, black swans, cb intervention, fear/greed of the herd, ...) there can always be a greater force to push the price against the dominant trend, so what exactly is trading with the trend? what trend? what feeds the trend? and who? how long will it last? answering those questions is your job.
Invincibility lies in the defence, the possibility of victory in the attack
  • #22
  • Sep 29, 2010 11:16am Sep 29, 2010 11:16am
the most you'll learn will come from experience, but here is a good start

http://www.nobrainertrades.com/

strats thread & technical analysis fallacy from fti here on FF

recommended readings:
fooled by randomness
reminiscences of a stock operator
trading & exchanges
extraordinary popular delusions & the madness of crowds
Invincibility lies in the defence, the possibility of victory in the attack
  • #23
  • Sep 29, 2010 11:38pm Sep 29, 2010 11:38pm
i am also confused about trend
when i start learning, i always see
"Trend is your Friend"...?

then later on only i have read some article that do not support that phrase
and there are no trend anyway..
  • #24
  • Sep 30, 2010 12:12am Sep 30, 2010 12:12am
Quoting sam1741
i am also confused about trend
when i start learning, i always see
"Trend is your Friend"...?

then later on only i have read some article that do not support that phrase
and there are no trend anyway..
This is why trading is so damn hard.
  • #25
  • Sep 30, 2010 1:09am Sep 30, 2010 1:09am
Quoting sam1741
i am also confused about trend
when i start learning, i always see
"Trend is your Friend"...?

then later on only i have read some article that do not support that phrase
and there are no trend anyway..
I think the mistake in this phrase is "THE trend is your friend" or "THE trend is not your friend" it implies there is ONE when there are MANY and so IMO both statements are half right and half wrong.
Time hides Nothing
  • #26
  • Sep 30, 2010 2:24am Sep 30, 2010 2:24am
Quoting EmeraldEyes
I have to agree. I'm still learning and trying to think ahead of the crowd then hit that sweet spot in a trend is much harder than it seems.

I'm going to take a shot though. lol

First pic on daily to clarify where your long trade would have failed, which I admit looks like a good spot for a long after that .50 fib bounce.

Now trend trading.. Here's a 2hr of the area where the first candle closed higher than the previous candle for the first time in like 20 candles (theres the higher high we need). I made a trendline on Price Action since we...
That's a very informative reply, thank you very much.

So I've been meaning to study some MACD divergences now to see how price action unfolds using these divergences.
However, I would like to ask, you say you don't use divergence but how did you then "tell" that it was a divergence there.

Don't misunderstand me now, I am not saying that you are lying. I am just trying to figure out the "guidelines" for what the chart looks like when it is a divergence, WITHOUT the MACD being on the chart.

Thank you!!
  • #27
  • Edited 2:58am Sep 30, 2010 2:26am | Edited 2:58am
Quoting sam1741
i am also confused about trend
when i start learning, i always see
"Trend is your Friend"...?

then later on only i have read some article that do not support that phrase
and there are no trend anyway..
Dont worry I'll be your friend


Inserted Video


Time hides Nothing
  • #28
  • Sep 30, 2010 3:11am Sep 30, 2010 3:11am
Quote
Kingfisher: This sounds very interesting, could you develop this more do you belive? I have never approached trading in the thought that it is our brains, I tend to believe that it is all about reading it, understanding it and experience. As said, very interested in your approach!!

Reading, Understanding and experience is also development of brain. The brain has 100 billion neurons connected with 1000 trillion synapses. When you acquire any new skill like trading, neurons and synapses get strengthen sending electrochemical impulse when you recognize a trading pattern.

Trading like any other skill is a 'synaptic strategy'. The decision to go long or short is taken inside your brain and brain sends signal to your hands to execute the decision.

There are 2 sides of brain- Left and Right. Left side is responsible for analysis, rational decision while right side is your intuition/gut feeling. The most profitable traders in world use a combination of both left and right side. They will take up a trade and if you ask them why you have you taken this trade, their answer is something like i felt the market will go in that direction.

Developing intuition is a matter of training and practice. The first step is to record in word and excel how market is behaving each day- How it reacts. Then learning, revising and memorizing each day behavior will develop neural network inside your brain.

I had met one of the top day trader in S&P 500 futures. He is trading for last 5 years. If you ask him, what happened in S&P 500 futures on lets say Oct 18, 2006 or dec 2, 2007 or feb 3, 2009, he will answer you in a second- Where market opened, did it made high or low first, what were high/low values, where market closed, how market reacted. He knows last 5 year patterns like a memory chip in a computer.

This is fluency at its best. This is use of subconscious mind to memorize past patterns and use that knowledge to make a day trading plan each day. This is discretionary trading.

He puts in deliberative practice to record each day in S&P 500 futures, learn, revise and memorize hundred times so that patterns, volatility, behavior is embedded in his subconscious mind. Every day/weekend he revise past patterns.

If i ask you what is 6+ 10, you will answer in fraction of second. If i had asked you same question in your kindergarten class, you would have to think a lot to answer it correctly or you would have answer it wrongly.

Over a period of time, you had practiced additions, subtractions, speaking language, driving etc thousand of times that the pathways/neural network in your brain are so strong that it takes you fraction of second to do these thing fluently.

If you are discretionary trader and watch markets for couple of years, you will get a feel of markets. But if you put 'deliberative practice' in making journals and learning, revising and memorizing the patterns thousand of times, you will accelerate the process of brain development.
  • #29
  • Sep 30, 2010 3:24am Sep 30, 2010 3:24am
Quoting kingfisher
I had met one of the top day trader in S&P 500 futures. He is trading for last 5 years. If you ask him, what happened in S&P 500 futures on lets say Oct 18, 2006 or dec 2, 2007 or feb 3, 2009, he will answer you in a second- Where market opened, did it made high or low first, what were high/low values, where market closed, how market reacted. He knows last 5 year patterns like a memory chip in a computer.

.
WOw! thats hard to believe although I do becasue Ive seen a sportsman (one of the best in their feild) do the same thing.

Glen McGrath was a great bowler for Australia (thats cricket you yankee doodles) and he can recall every single wicket he took over his entire career. Who it was, when it was, what he got them out for. Incredible seeing as he took 500 + wickets for Australia over his 15 + year career. (Half of them probably Poms )

But yeah. Crazy stuff that computer thats in all or heads that most of us will never bother to use.
Time hides Nothing
  • #30
  • Sep 30, 2010 3:53am Sep 30, 2010 3:53am
Quote
WOw! thats hard to believe although I do becasue Ive seen a sportsman (one of the best in their feild) do the same thing.

Glen McGrath was a great bowler for Australia (thats cricket you yankee doodles) and he can recall every single wicket he took over his entire career. Who it was, when it was, what he got them out for. Incredible seeing as he took 300 + wickets for Australia over his 15 + year career. (Half of them probably Poms )

But yeah. Crazy stuff that computer thats in all or heads that most of us will never bother to use.

Yes, you are right. I have read Glenn interview. He revise his bowling skills by looking at recorded videos and spent countless hours with his coach how he could improve better.

People say trading is a different profession. We do not need any skill to do trading. This is what i say 'trap'. On the face of it, it looks like one needs absolutely no skill to do trading. Either long or short, put a SL and thats it ! This is why no trader ever will start with skill development.

Patterns remain same in trading, the issue is to predict the volatility- What will be daily range lets say in S&P 500 futures.To navigate through problem, i have seen the top day trader in S&P 500 futures to keep taking profits at every interval like 2 points.

I know many people will have hard time believing that one needs to study trading but to become a top discretionary trader, i firmly believe from my own experience this is route to go.
  • #31
  • Sep 30, 2010 4:10am Sep 30, 2010 4:10am
Quoting Dopey
This is why trading is so damn hard.
yeah... and i still can't get the hang of it..



Quoting CindyXXXX
I think the mistake in this phrase is "THE trend is your friend" or "THE trend is not your friend" it implies there is ONE when there are MANY and so IMO both statements are half right and half wrong.
i guess is kinda 'glass half empty' thing..




Quoting CindyXXXX
Dont worry I'll be your friend


http://www.youtube.com/watch?v=NgrRR...eature=related

thank you my friend .[can't find the handshake icon]
  • #32
  • Sep 30, 2010 4:21am Sep 30, 2010 4:21am
Quoting sam1741
yeah... and i still can't get the hang of it..

i guess is kinda 'glass half empty' thing..

thank you my friend .[can't find the handshake icon]
Nah nothing mystic about it just that theres many types of traders in the market operating on different timeframes, scalpers, position traders etc, they all have their different prices and objectives. Gotta work around that fact instead of trying to find THE trend... If that makes sense. IMO of course. Might get into this more a bit later right now I need some dinner
Time hides Nothing
  • #33
  • Edited 4:39am Sep 30, 2010 4:26am | Edited 4:39am
Quoting Carnegie
That's a very informative reply, thank you very much.

So I've been meaning to study some MACD divergences now to see how price action unfolds using these divergences.
However, I would like to ask, you say you don't use divergence but how did you then "tell" that it was a divergence there.

Don't misunderstand me now, I am not saying that you are lying. I am just trying to figure out the "guidelines" for what the chart looks like when it is a divergence, WITHOUT the MACD being on the chart.

Thank you!!
No problem, thanks for the questions. Remember, I'm still a student and I'm learning as we go so take my TA w/ salt.

When studying MACD you'll read about "lower-highs in MACD, higher-highs in PA = down divergence".. but studying the LOWER-lows of MACD (and in this perfect example), higher-low in PA = good long opportunies.

Now I'll try to explain how I saw divergence but you'll start seeing it too if you stick with no indicators and only using them while studying TA or for confirmation like I did. btw, what helps my learning has been studying what these indicators are really calculating. What formulas they use, where they get their inputs from, how many periods ago, ect.

The way I can tell there may be divergence was how strong this downward thrust making continuous lower lows yet it stopped dead in it's tracks followed by a big up candle. This low/bounce/support candidate which is circled to the right of the chart was still higher than that last major low so we can't say its going to continue to make a downtrend since the uptrend hasn't been confirmed done, right?
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd.png Size: 46 KB
  • #34
  • Sep 30, 2010 4:40am Sep 30, 2010 4:40am
Quoting CindyXXXX
Nah nothing mystic about it just that theres many types of traders in the market operating on different timeframes, scalpers, position traders etc, they all have their different prices and objectives. Gotta work around that fact instead of trying to find THE trend... If that makes sense. IMO of course. Might get into this more a bit later right now I need some dinner
Thanks Cindy... hope to hear more too
i still determine which one i like...

Seems like everyone saying trading long term
but enjoy the thrill bring by scalping small profit
  • #35
  • Sep 30, 2010 5:38am Sep 30, 2010 5:38am
Quoting kingfisher
Yes, you are right. I have read Glenn interview. He revise his bowling skills by looking at recorded videos and spent countless hours with his coach how he could improve better.

People say trading is a different profession. We do not need any skill to do trading. This is what i say 'trap'. On the face of it, it looks like one needs absolutely no skill to do trading. Either long or short, put a SL and thats it ! This is why no trader ever will start with skill development.

Patterns remain same in trading, the issue is to predict the volatility-...

Sounds very good and let me tell you that I am very much willing to do my homework. It is only the fact that I've been studying for approx. a year now and still isn't poriftable.
And let me tell you that school is not a problem for me, so I study trading ALL DAY long 10h +.. For a year.. And still not "making sense".

Now I would like to ask you, how do you think I should start with my "journals" and what should I write down in them?

Cindy: Looking forward very much to your contribution. As I should have said is that I understand the "reason" behind the concept of TRENDS in TREND.
That perhaps daily is uptrend and hourly chart is correction "trend" down. I understand this, what I want to understand is when, why and HOW the correction-downtrend in hourly "gives up" and loses the fight against the uptrend; and start to trending up aswell.
  • #36
  • Sep 30, 2010 5:47am Sep 30, 2010 5:47am
Quoting EmeraldEyes
No problem, thanks for the questions. Remember, I'm still a student and I'm learning as we go so take my TA w/ salt.

When studying MACD you'll read about "lower-highs in MACD, higher-highs in PA = down divergence".. but studying the LOWER-lows of MACD (and in this perfect example), higher-low in PA = good long opportunies.

Now I'll try to explain how I saw divergence but you'll start seeing it too if you stick with no indicators and only using them while studying TA or for confirmation like I did. btw, what helps my learning has been studying...
Thanks emerald that's good information. Earlier I read about MACD divergences but said to myself from the beginning that indicators wasn't my cup of tea.

Now, you say that this low/support (that was circled on the right) was higher than the last major low so we assume uptrend still intact.
Why did we assume this? Because candlesticks and higher points told us this correct?

NOW! This is what I dont understand,look at the picture form page 1:
http://cdn.forexfactory.com/attachme...1&d=1285682736

The low wasn't violated wasn't it? AND the best of it, it was making MUCH MORE clearer signals than you trade did. Now this is what I scares me from taking trades, I don't know when it's false, or not!

Thanks man
  • #37
  • Sep 30, 2010 6:54am Sep 30, 2010 6:54am
Quoting Carnegie
Thanks emerald that's good information. Earlier I read about MACD divergences but said to myself from the beginning that indicators wasn't my cup of tea.
It really helps to know indicators such as the almighty MaCD for and extra tool in ur toolbox to help spot divergences but never use it as just a signal for going long or short, IMO.

Quoting Carnegie
Now, you say that this low/support (that was circled on the right) was higher than the last major low so we assume uptrend still intact.
Why did we assume this? Because candlesticks and higher points told us this correct?
First of all, I zoomed out a little and used the 2hr chart so I can check out the prevailing trend and take out all that noise. The whole "uptrends=higher-highs and higher-lows" is incorrect. Can an uptrend actually have lower-highs in it? Sure! I'm only looking for higher-lows. Same goes for downtrends. Downtrends are not lower-highs and lower-lows. I just care about those lower-highs.

Quoting Carnegie
NOW! This is what I dont understand,look at the picture form page 1:

The low wasn't violated wasn't it? AND the best of it, it was making MUCH MORE clearer signals than you trade did. Now this is what I scares me from taking trades, I don't know when it's false, or not!
I was hoping you'd say something about why that trade didn't work out, even with those candles. It could very well have been the continuation of the uptrend right there but it was still going down, only taking a breath before moving lower. There was no 'up' move at all just a brief move sideways. Nothing showed that the down move was completed. ie; it didn't make a 'valley' like the signal I showed you did a little ways down. I've also learned to go off of the CLOSE of candles for confirmation, not current ones.
  • #38
  • Sep 30, 2010 8:22am Sep 30, 2010 8:22am
Quoting EmeraldEyes
First of all, I zoomed out a little and used the 2hr chart so I can check out the prevailing trend and take out all that noise. The whole "uptrends=higher-highs and higher-lows" is incorrect. Can an uptrend actually have lower-highs in it? Sure! I'm only looking for higher-lows. Same goes for downtrends. Downtrends are not lower-highs and lower-lows. I just care about those lower-highs.



I was hoping you'd say something about why that trade didn't work out, even with those candles. It could very well have been the continuation of...
FINALLY SOMEONE THAT AGREES! What I am not understading is this concept of UPTREND is higher lows and higher highs. But to know this, is impossible. You can only "know this" in hindsight as you see it!

But now you have to explain to me, what you mean by "I only look for higher-lows".

"It could very well have been the continuation of the uptrend right there but it was still going down, only taking a breath before moving lower. "
This is of very much importance to me, the answer to this. How should/could I have known that it was only taking a breath/resting there.
Was it a pattern or what? How should I treat these kinds of situations? Should I wait for price to exceed the high before buying or what?

And yes, everything showed that the downmove was over, atleast the DOWN MOMENTUM. Since someone was buying all the lows creating hammers all the way around; that's how I was reasoning.

"I've also learned to go off of the CLOSE of candles for confirmation, not current ones"
Please explain the reasoning behind this a little bit more.

And you say aswell that in uptrends you are only looking for higher lows and in downtrends for lower highs. But how will you then know, when the market reversed from UP to DOWN or DOWN to UP or even DOWN/UP to SIDEWAYS?

Thanks man, and if you don't feel like answering anymore I understand!
  • #39
  • Edited 10:32am Sep 30, 2010 9:54am | Edited 10:32am
Quote
Sounds very good and let me tell you that I am very much willing to do my homework. It is only the fact that I've been studying for approx. a year now and still isn't poriftable.
And let me tell you that school is not a problem for me, so I study trading ALL DAY long 10h +.. For a year.. And still not "making sense".

Now I would like to ask you, how do you think I should start with my "journals" and what should I write down in them?

I can tell you what helped me. I picked up one market where i want to specialize. I trade S&P 500 futures exclusively. The reason was my order goes direct to New York Stock Exchange and i prefer that.I had traded Forex earlier but was not happy with the private bucket shops neither 24 hour trading suit me.

I am a day trader- Strict day trader. I never ever carry leveraged future position overnight to avoid global risk.

If you want to become a discretionary trader- that is using your brain grey matter to execute trades then this technique will be helpful. If you want to be a mechanical trader, then you need to search for trading system having an edge.

One journal in word which mentions what happened on that day - Was it gap up/gap down opening, what was high, what was low, did it make high first or low first, what was the close. Also any news which impacted the markets. In 3 months, once you start to understand the structure of markets, you will feel an innate ability to handle market volatility.

One journal in excel which records OHLC for everyday

One folder which saves every day charts. I use only price to form a trading plan..i dont even look at charts but i still save them in case for any reference.

These steps will help you reinforce discipline and have a organized way of looking at markets. A novice trader will feel markets is basically random and unstructured. An experienced trader will feel wow another repeated pattern today.

These documents act as a reference book for you. Now the idea is to incorporate book theory in your mind just like we did in school or college.

The idea is not to do root memorization, the idea is to feel the markets since trading is an application game. Every day situation and volatility changes and hence trading is an application game. You need to apply past historical patterns and form a trading plan before trading day starts.

Memorizing what happened every day is the first step to form a neural network inside the brain. When you will be learning and revising your trades and if one do a functional Magnetic Resonance Imaging on your brain, we could see highlighted activity in certain areas of brain responsible for skills development.

Revision is the mother of all learning. So after learning, you need to revise everyday and information will be stored in your permanent memory in your brain.

Buddy, it is an immense hard work. 500 hours of training are quite good to form new pathways in brain so as to enhance your trading.
  • #40
  • Sep 30, 2010 11:41am Sep 30, 2010 11:41am
Quoting Carnegie
What I am not understading is this concept of UPTREND is higher lows and higher highs. But to know this, is impossible. You can only "know this" in hindsight as you see it!
Here's a perfect thread for you by a great teacher: http://forums.babypips.com/newbie-is...d-trading.html

I'm still learning so it's hard to explain but read at least the first 200 pages in order. That's how I became a trend finder. It really helps in idetifying trends and will open your mind. You'll def. like it!

Quoting Carnegie
But now you have to explain to me, what you mean by "I only look for higher-lows".
That's what classifies uptrends to me. I dont pay attention to the other half, the "higher-highs" when identifying existing uptrends. There are instances where uptrends have lower-highs yet maintain higher lows. Basically when you draw a trendline, you're connecting the higher lows. And the lower highs with a downtrend line. Hope that helps. lol.
*We're looking for higher-highs when starting an UPtrend though. How about.. a higher-high that exceeds a previous lower-high of a downtrend.. thats how a trend starts off.

Quoting Carnegie
This is of very much importance to me, the answer to this. How should/could I have known that it was only taking a breath/resting there.
Was it a pattern or what? How should I treat these kinds of situations? Should I wait for price to exceed the high before buying or what?
It was too much noise there but when I zoomed out a little I could see that it was all red. You got it! Price exceding the last X amount of candles would be how an uptrend starts, right? That consolidation area didn't have that, just a range. It did break from it towards the downside though.

Quoting Carnegie
"I've also learned to go off of the CLOSE of candles for confirmation, not current ones"
Please explain the reasoning behind this a little bit more.
I only ment that the close of the candle is whats official. I tend to buy/sell at what ends up being wicks that exceed the former candles since I thought I had a trend starting which puts me in the hole from the start. Through backtesting I've found the close of a candle is much more accurate. (about trends starting out)
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