Detemining trending market or sideways

[expensif]

I would like to know how I best can determine if the particular market is trending up/down or if it is just sideways.

My strategy is position/swingtrading by trend following. My strategy is sound in a trending market, i think, but of course for a trendfollowing strategy choppy markets going sideways is deadly.

One way I can think of is just by looking at the charts, is the MA pointing up or down or just sideways. But what MA should I use? Is there any special indicator that would measure something like this?

I would be more than happy for any suggestions.

 

[techst]

Yeah might be adviseable to check the weekly charts, go back a few years. You could use a 26EMA on a Weekly 'elder style'. If the price is above the 26EMA your in a Bull market, if the price is below the EMA then your in a Bear market.

Even if the stock is moving sideways, they're maybe some nice setups, but that depends on your system. If you were being conservative, you could make a rule to just trade stock that a clearly above their 26EMA and trending and catch the short term swings when the stock comes back to value.(back to the 26EMA Weekly.

But some of the best trading profits occur at points where there is uncertainty, this can happen where a stock will set a trap for early and eager traders trying to spot a new trend then reverse and start flying again. I saw this time and time again when we went through the large correction this year.

 

[Mr. Charts]

I think it's better to come at the problem from a different angle.
I realise this sounds simplistic, but eyeballing a chart should tell you if a market is bouncing, trending or ranging or indeterminate,
So then consider:
Why not ignore i.e not trade an indeterminate market?
Why not have a strategy for profiting from a market which is not trending?
Why not find instruments within a ranging market which are trending?
Richard

 

[expensif]

Yes I should have a strategy for trading ranges too. That is what I am planning to do next, but the reason for this thread was to see If I could find a way to mechanically/automatically have my computer switch between system A for up-trends, system B for ranges and system C for downtrends - according to which state the market is in.

 

[expensif]

Your charts look nice Techst, it might be a worthwhile method. I'll look into it.

 

[expensif]

Mr. Charts, I guess doing it the easy way - eyeballing the charts and choosing what system to trade is also very good. But I think if it can be automated and supervised it is better.

 

[damianoakley]

Hi expensif,

if you want to automate you could use the ADX indicator.


Thanks

Damian

 

[Mr. Charts]

expensif,
If you want to use ADX as one of your "indicators" you can simply use a scanner which incorporates that - and others. There are free scanners around.
www.tradingmarkets.com

I suspect it won't be long before you start thinking (you may have done already) about how to distinguish when a ranging market becomes a trending one.
www.mesasoftware.com
Again, the stuff between your ears works best, however much you might enjoy searching for "automation".
I am not recommending those sites or products, merely trying to be helpful.
Richard

 

[Grey1]

ADX just like its sister MA is as useful as saddam Hussian's army .. Totally powerless.

To learn how to gauge the market direction or phase ( trending / oscillating ) you need to understand cycles and Multi Time frame analysis . Cycle analysis is not an easy subject in TA and needs a lot of knowledge .. If you did not wish to bother with Cycles then you might wish to consider regression analysis approach which is currently used in many algorithmic trading .

I just posted some thing on Technical Trader BB regarding trend and cycles.. perhaps you like to apply to join the BB and start learning proper Technical Analysis .

Grey1

 

[yacarob1]

If you want to use ADX as one of your "indicators" you can simply use a scanner which incorporates that - and others. There are free scanners around.
www.tradingmarkets.com

Just had a look at www.tradingmarkets.com site.

Mr Charts, would you give any credibility to the so called "Power Ratings"that they appear to be selling ?

 

[Mr. Charts]

boracay,
I haven't looked at whatever it is in detail. I only use my own methods and make no comment whatsoever on other things.
I do not take money from any website, (I have my own), data provider, broker etc.to recommend them or their products, or feed them with business from my students.
I choose to do my own thing, in my own way and refuse to be sponsored by anybody.
As I said, "I am not recommending those sites or products, merely trying to be helpful."
I am prepared, however, to privately mention if asked, the data provider and broker I personally use and to say which "vendors" are, in my humble opinion, actually honest decent people
I will make no comments on the others who inhabit these boards..........nor on the various "products" for sale.
Richard

 

[dbphoenix]

Yes I should have a strategy for trading ranges too. That is what I am planning to do next, but the reason for this thread was to see If I could find a way to mechanically/automatically have my computer switch between system A for up-trends, system B for ranges and system C for downtrends - according to which state the market is in.

If I may ask, why do you want to do that, i.e., automate it?

Db

 

[damianoakley]

ADX just like its sister MA is as useful as saddam Hussian's army .. Totally powerless.

I happen to agree - ADX was just a suggestion for something you could find helpful if you are wanting to automate the process of determining whether a market has previously been trending or consolidating.


Thanks

Damian

 

[beta_28]

expensif,
If you want to use ADX as one of your "indicators" you can simply use a scanner which incorporates that - and others. There are free scanners around.
Online Stock Trading Investing Day Trading

I suspect it won't be long before you start thinking (you may have done already) about how to distinguish when a ranging market becomes a trending one.
Home
Again, the stuff between your ears works best, however much you might enjoy searching for "automation".
I am not recommending those sites or products, merely trying to be helpful.
Richard

Hi damianoakley,
How do you objectively determine if the maket is trending or not using ADX? Thanks

 

[beta_28]

Hi damianaokley,

How can you obejectively identify if the market is trending or not using ADX. I had a hard using it in my trades. Thanks

 

[PualoP]

Hi ,

How can you obejectively identify if the market is trending or not using ADX. I had a hard using it in my trades. Thanks

I doubt you'll get a reply from damianaokley, he quit trading about a year ago http://www.trade2win.com/boards/general-trading-chat/32173-i-quit.html. Maybe that says something about using ADX........

 

[beta_28]

I doubt you'll get a reply from damianaokley, he quit trading about a year ago http://www.trade2win.com/boards/general-trading-chat/32173-i-quit.html. Maybe that says something about using ADX........

Ok. Thanks. Have seen the trend.

 

[everyonerich]

Question : Detemining trending market or sideways

Answer :

Past data - Yes.
Future - No.

 

[rogue8]

From my (limited) experience, the easiest way to 'quantify' a trend is by the angle of the moving average(s). However I don't know of any software that does this automatically unless you program it yourself.

So as Mr Charts says, the best way is to use your brain box: higher highs, lower highs etc - with experience you get a feel for market conditions even though you can't know for sure what's going to happen next.

If you have a mechanical system, you could scale it up / down to find a trend (identified visually). If price is ranging on the Hourly chart (and you want to trade the same instrument), what do the trends look like on a 15 minute chart and so on... Adapt to the market conditions.