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What is a good way to tell if a trend still has momentum?

  • #21
  • Aug 6, 2014 4:48am Aug 6, 2014 4:48am
I posted a video a while ago with a bank trader and he made an obvious point:

'work out a system that makes profit in a trend. When the strategy stops making money the trend is over.'
tradewith60
  • #22
  • Aug 6, 2014 5:09am Aug 6, 2014 5:09am
I did qualify my comment for those who would take offence and of course, I am mindful not to unsettle those who have systems that work for whatever duration. But for consistent results irrespective of market conditions, you would need to look for the trigger prices and that is just the way it is.
The road to pipland is arduous and fraught with challenge.
  • #23
  • Aug 6, 2014 5:34am Aug 6, 2014 5:34am
Quoting 21vs7
{quote} I strongly agree with this.
I found out that when we have a strong phase of a trend we see that retraces arent in place. (at least the big frame ones.) Meaning, with conservative entry policy in a strong trend one cant even get in..Really, for months..! I would say this is a strong momentum trend.

I look thru a mechanical way and I like the definition. And its simple. HH,LL, HL,LH resistance of strong retraces. I would add also a indication of where the whole market is - meaning USDxxx. That makes a strong move. IF we have a low retrace factor on all of them pairs, and making some new H/L levels, something is happening.

When we get price to the levels where we can suspect some consolidation, we have some kind of balance. Imbalance is weakening and we are in a range. Meaning retraces are in place and lets say overall USDXXX market is in a phase of correction and a pause.
  • #24
  • Edited Aug 7, 2014 2:07am Aug 6, 2014 5:52am | Edited Aug 7, 2014 2:07am
Quoting 60minuteman
people please stop saying "the only way" it's the most naive and uneducated response to anything when it relates to trading.
Did you read the title and the first post? I replied to that.

The only way to observe. Not how to play. Obviously, you can play it whatever way you want, but that was not the question. There is only one way for a retail trader to recognize imbalance. That is higher highs and lower lows. The only one 100% reliable evidence. Anything else is just derivative noise.

I make another point. Most of the traders here are at the beginning of their trading journey. That is why you have to send a very simple message.
Do you remember when you started trading 100 years ago? What advice would have been useful for you?
I wish I had my advice when I started trading. But I could not have used your advice, that is for sure.
Do you see my point?

Anyway, so far I did not see too many clear, understandable, reliable advice here.
So, how can a retail trader in his/her first year recognize trend, imbalance? My naive, uneducated mind is open to hear that.
  • #25
  • Aug 6, 2014 6:20am Aug 6, 2014 6:20am
Much more scientific approach than what is being said in the topic: http://cssanalytics.wordpress.com/
  • #26
  • Aug 6, 2014 7:18am Aug 6, 2014 7:18am
Quoting Visitor
{quote} Did you read the title and the first post? I replied to that. The only way to observe. Not how to play. Obviously, you can play it whatever way you want, but that was not the question. There is only one way for a retail trader to recognize imbalance. That is higher highs and lower lows. The only one 100% reliable evidence. Anything else is just derivative noise. I make another point. Most of the traders here are at the beginning of their trading journey. That is why you have to give a very simple message. Do you remember when you started...
I did read the title yes and I didnt read your post, but seem's you brought it up... the title is to tell, not observe.

i still stand by the statement that there is never only one way whatever you might believe.
tradewith60
  • #27
  • Aug 6, 2014 7:28am Aug 6, 2014 7:28am
Quoting traider
I did qualify my comment for those who would take offence and of course, I am mindful not to unsettle those who have systems that work for whatever duration. But for consistent results irrespective of market conditions, you would need to look for the trigger prices and that is just the way it is.
so you have evidence that any other method is inconsistent or are you just making up rubbish to boost your own ego?? - because you have to wonder what qualifies you to say only your preferred method is the only consistent method. Did all the great trend traders use that method? I don't think the ones I have studied did...
tradewith60
  • #28
  • Aug 6, 2014 7:54am Aug 6, 2014 7:54am
Quoting 60minuteman
{quote} I did read the title yes and I didnt read your post, but seem's you brought it up... the title is to tell, not observe. i still stand by the statement that there is never only one way whatever you might believe.
OK. I leave it at that. We are here to help, not to argue.
  • #29
  • Aug 6, 2014 8:11am Aug 6, 2014 8:11am
Quoting 60minuteman
If the fundamentals are unchanged then the trend will most likely continue

i agree, all about the fundamentals.. technical's are cool for entering and exiting. but thats all based on past info, like looking over your shoulder when you should be looking whats in front and ahead
  • #30
  • Aug 6, 2014 3:47pm Aug 6, 2014 3:47pm
Hi Ponzi Jr,

My regards to Ponzi Snr I think I knew him hehe.

I use a concept from J Peter Steidlmeyer to determine continuation or change in a trend.
He sets out some very objective ways to categorise intra day activity as either responsive buying/selling (expected activity) or initiating activity (forced buying or selling, that is buying at higher prices or selling at lower prices). It's important to note, the way he defines the market we are only taking notice of "beyond the day" traders, not intra day.

Then it's a simple case of monitoring that. I personally simply keep an average of the last 6 days activity. If it's red (minus) I take sell triggers, if it's black (positive) I take buy triggers.

Below is a snapshot (without workings sorry) of the last few months in the EUR/USD. I think it shows the turns quite nicely. NOW IF ONLY I'D TRUST IT!
Attached File(s)
File Type: xlsx EURUSD Capflow.xlsx   11 KB | 417 downloads
  • #31
  • Aug 6, 2014 4:22pm Aug 6, 2014 4:22pm
Here's a graphic representing the changes from black to red from the spreadsheet onto the EUR chart if it's easier to view.
Take buy triggers in the blue boxes, sell triggers in the red.
Attached Image (click to enlarge)
Click to Enlarge Name: EUR Capflow Chart.PNG Size: 148 KB
  • #32
  • Aug 6, 2014 7:36pm Aug 6, 2014 7:36pm
Quoting Hyperion
Here's a graphic representing the changes from black to red from the spreadsheet onto the EUR chart if it's easier to view. Take buy triggers in the blue boxes, sell triggers in the red. {image}

But doenst this have a hindsight bias? I mean if we can draw boxes like this into the future would be great
  • #33
  • Aug 6, 2014 10:13pm Aug 6, 2014 10:13pm
It's taken off the spreadsheet which I've run for years, it's not hindsight but I'm not going to defend it... I have nothing to prove here.
Anyway, know this and making money from it are still two very different things.
  • #34
  • Edited 10:40pm Aug 6, 2014 10:20pm | Edited 10:40pm
Quoting Ponzi Jr
Can anyone suggest an effective way of telling whether a trend is likely to still have momentum behind it? A way to tell whether there is still a heavy imbalance between buyers and sellers?
Seems simple, but it may be difficult in practice. Here is the trick.


While keeping your eyes closed, try to touch tip of your left index finger with that of right. If both tips meet, trend will continue with the same momentum, otherwise it has lost steam.

But this is forex, you never know.

Trade responsibly

Quoting Proximus
{quote} Second educated post in this thread
Believe it or not, finding water with wooden or copper sticks is also a science

http://www.collectorsweekly.com/arti...ngForPalme.jpg
The Thief of Wall Street
  • #35
  • Aug 6, 2014 10:51pm Aug 6, 2014 10:51pm
Sorry Ponzi, just one last thing, in case anyone looked at my chart and assumed it's going to be Red going forward and used that to take action, please don't.
It's not, it turns black for the next session unless there is a lot of selling preventing the black change. Assuming I wake up and it is black, I still couldn't take buy triggers until my own daily price action is met. Right now that doesn't kick in until 1.3440 is taken out. I just felt the need to clarify that! My post wasn't a call on the markets, just an example of how I measure the duration of a trend
  • #36
  • Aug 6, 2014 11:14pm Aug 6, 2014 11:14pm
Quoting gspajon
{quote} This depends largely on your method for determining that imbalance. In Forex you can try to use futures volume. You can also look at the behavior of price and how that effects standard indicators like MACD or RSI. The crux of the matter is this: In my view, there are two ways a market "runs out of steam". Both manifest the same underlying structure but reveal themselves in different ways. The the example, I will use a bullsih scenario but the opposite is true for bearish as well. Scenario #1: Assuming a bullish trend...you must also assume...
Really awesome explanation. Makes perfect sense. I'm sure it would help a lot of us visual folks if you could show some examples from a chart so we get exactly what you mean I'm pretty sure I get it but seeing it visually would be awesome!


I would add that "volume" plays a role as well. When in a ranging situation, the OBV indicator sometimes gives a hint towards the range breaking direction. Also learn a bit of VSA (Stopping volume).. and then there is PA (the spikes up and down).. spikes that fail to break the previous lows and gets suddenly rejected. That's showing that the big boys have entered and they are looking to reverse. Those are signs of trend reversals in my opinion.
Focus, Patience, Determination & Order in chaos
  • #37
  • Aug 6, 2014 11:46pm Aug 6, 2014 11:46pm
Quoting saver0
{quote} Really awesome explanation. Makes perfect sense. I'm sure it would help a lot of us visual folks if you could show some examples from a chart so we get exactly what you mean I'm pretty sure I get it but seeing it visually would be awesome! I would add that "volume" plays a role as well. When in a ranging situation, the OBV indicator sometimes gives a hint towards the range breaking direction. Also learn a bit of VSA (Stopping volume).. and then there is PA (the spikes up and down).. spikes that fail to break the previous lows and gets...
I respect everybody's opinion on this subject and hope my opinion wont get a different treatment.

My very limited knowledge of these market tells me there are so many factors affecting price and movement of any currency pair that it is almost impossible to know if trend will continue, exhaust and stay, or it will reverse. There are several indicators including chart reading, order flow, etc. but every one of these indicators have their own limitations. For over seven years, I spent more time flying than on the ground. Every single time I took off, I reminded myself that thousands of planes of all kind with all type of pilots take off and land safely in an hour all over the world in all circumstances ................ but there was always one thought which I never got rid of during each landing and take-off, this thought was "but this plane has not landed/air-born yet, ...................... this bloody particular flight". Same is true for any pattern or indicator ...................... "We don't know what gonna happen this bloody time".
The Thief of Wall Street
  • #38
  • Aug 6, 2014 11:51pm Aug 6, 2014 11:51pm
Quoting Chicky
{quote} Same is true for any pattern or indicator ...................... "We don't know what gonna happen this bloody time".
Nicely put Chicky, we just have to have faith in our methods (brought about by average R/R over time or whatever) and make sure we practise flawless execution of our method (even after all these years I'm still working on that), then just shoot the arrow and trust like a Japanese Archer.
  • #39
  • Aug 6, 2014 11:52pm Aug 6, 2014 11:52pm
The FX market is a business, and it should be treated as such. Institutions don't care about any indicators on a chart. They watch price and price only. When the retail crowd is selling, who do you think is buying from them ? The banks.. Think like an institution.. would you buy at high prices and sell at cheap prices ?


My two cents.
  • #40
  • Aug 6, 2014 11:58pm Aug 6, 2014 11:58pm
Quoting allisonmagic
The FX market is a business, and it should be treated as such. Institutions don't care about any indicators on a chart. They watch price and price only. When the retail crowd is selling, who do you think is buying from them ? The banks.. Think like an institution.. would you buy at high prices and sell at cheap prices ? My two cents.
I think there would be plenty of black box trend following hedge funds that would disagree with you.I knew one who's main entry point was to buy at places where he knew hedgers would be on the otherside of his trade (he would buy new highs, they would be hedging there) and another who's method of entry was to buy where sellers should be stopping out (but probably weren't) or vice versa.
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