Any ways of avoiding ends of trends?

You might not find any of my posts discussing this topic specifically, but it is important to identify what you want to measure. For instance, I could earn good pips, but then get caught in consolidation and give them all away. So, I developed a method to show me consolidation areas to protect my earnings. Just an example. I also can measure highs and lows, but that is actually easy, so I was more concerned about finding the dead areas.

If you want to measure exhaustion, start by using a semaphore zigzag indicator that will draw the dots on each high and low. The indicator does not work for live trading, but is really quick for doing historical analysis. I use a yellow 3 to find the prominent highs and lows. Next, determine the time frame you want to trade. To best choose it, evaluate whether or not you want trades to continue while you are sleeping. If so, you need to learn about stops. If not, then how much time per trade do you want to monitor the trade? Once you figure out the time frame, then choose the most active hours of that currency pair. Some trade better during Asia, others London, others New York, others Australia. Identify the trade highs and lows during the active trading hours and use your mouse cursor to measure the number of candles. Get an average of as many trades as you think appropriate. This number will help you know a decent setting for your indicator.

On my thread I do discuss about indicator ranges, so once you find the indicator capable of measuring the entire range of your trade, then input your average and go from there. Some indicators will work by crossing a 0 line, others a 50 line, while most will need a moving average placed on them to dissect the signal.

This should help you get started. Good Luck

Hi Justin

We all had to start somewhere, so this may help!

I would say its the thought process as it seems you are trying to predict the future slightly. Below are some tips which may keep you out of trades when you dont need to be in them.....not knowing how you look at a reason for entrys etc currently some of this may be obvious already?

1. Depending on the time frame you want to trade I would first check the over all trend on higher time frames first (daily, weekly, monthly).
2. If overall trend in higher timeframes is in the same direction you would look for entrys on lower times such as 240m and 60m.
3. I would then do an elliott wave count which generally is 5 waves in any direction with long trends being higher lows on pullbacks and lower highs on pullbacks in a downtrend.
4. Once you get used to seeing these its easier to spot possibly where a trend may reverse (you can also spot an abc correction at the end of the 5 wave move which is a place where a new trend may begin).
5. I then draw fib's to show reversal areas and also use symetry to see if there is stronger technical analysis to support the findings.
6. Best ratios for reversals are 38.2%, 61.8% and 76.4%, if you set up fibs with 127.2% and 161.8% then this will show over extended moves and if those are reach it signals bigger moves.
7. I use an OBS with 80 overbought as the high and 20 oversold as the low (use these as a guide). a MACD, moving averages with 8, 20, 50 and 200
8. Always trade with the trend but be aware of support and resistence areas and trendlines whuch all add to the overall picture.

JP

Dkrock,
If you don't mind me asking...could you help clarify two points?
If you want to measure exhaustion, start by using a semaphore zigzag indicator that will draw the dots on each high and low. The indicator does not work for live trading, but is really quick for doing historical analysis. I use a yellow 3 to find the prominent highs and lows.
Do you use a higher time frame than the one you are normally trading off of to establish the highs or lows? For example the highs or lows on a 5 minute would be somewhat different to those found on a 15 or 30 minute chart. Or should you only focus on the prominent highs and lows on the timefr?

Some indicators will work by crossing a 0 line, others a 50 line, while most will need a moving average placed on them to dissect the signal.
Could you elaborate a little bit on what you mean by needing a moving average to "dissect" the signal? Does this refer to the idea that most indicators are based off of a moving average of sorts or that moving averages should be placed on the indicator to do some action such as smoothing?

My opinion:

1. You must define what you believe is the start of a trend. Whether that's a moving average, moon phase or whatever doesn't matter, it has to be something you believe in.
2. Only enter trades when those conditions have initially been met. Not later but right when those conditions have been met.
3. GET OVER THE FACT THAT YOU WILL BE WRONG SOMETIMES! The fear of losing money and/or being wrong freezes so many people in their tracks. When you accept it as a part of doing this then everything becomes easy (er).

I never try to join a trend after it has been running for a while. Not worth it in my opinion. I will wait for conditions to indicate that the trend has changed and then jump in. If I am wrong, I am wrong. I just close the trade and wait for things to change again.

My experience has taught me that I am wrong more often when I try to join a trend than when I wait for a new trend to develop. Others may have a different experience.

I'd say predicting the end of trend is one the biggest issue. I use Price action and I'm looking for some kind W/M patterns but it's not always very accurate unfortunately.

Yep!

Pay attention to the fundamentals and you will know when to avoid the end of trends. Using indicators to do this... useless.

Market behavior is the same as one of people. Even the cutest girl can stab you, if she feels like it. There are no ways to actually predict the further movement of the market(and the trend), except for supply/demand numbers, that can be subjective, so no real need to bother searching it, I think.

if you are not good in trend trading, you can try counter trend methods.
you can try in 5 min, 15 min, dont go higher then 30 min above because it will be too late for this time frame.

keep looking and keep thinking.
good luck.

Justin,

Trend trading is not the only approach. In fact, trend trading one of the hardest things to do in trading. Large hedge funds have no choice but to trend trade due to liquidity requirements. Ironically, it seems easy, so most beginners pile onto this approach. Be warned that trend trading does not product steady returns--that is what shorter-term scalping off S/R levels is for.

There is really no oversold/undersold indicators for trends that are purely mathematical and work only based on price.
Fundamental context is always necessary and is always changing. For example, price action that would be considered oversold during a non-volatile Asian session would not even be close to being considered oversold after the release of a worse than expected non-farm report which causes the USD to drop like a rock.

Hope this helps.