Which markets trend more often/consistently

[hellokimchi]

Many people's trend following systems trade the futures markets, sometimes also the stock index futures.

Why don't many people seem to trend follow individual equities? Is it because they are more likely to trend for short times or trade in ranges?

The very long term trend for equities (as a group) is up, so maybe trend-following equities on the short side isn't so profitable or is higher risk?

In your opinion, what type of markets historically have been most suitable for trend trading?

 

[tightstops]

Many people's trend following systems trade the futures markets, sometimes also the stock index futures.

Why don't many people seem to trend follow individual equities? Is it because they are more likely to trend for short times or trade in ranges?

The very long term trend for equities (as a group) is up, so maybe trend-following equities on the short side isn't so profitable or is higher risk?

In your opinion, what type of markets historically have been most suitable for trend trading?

its often said currencies trend more than most.
i vaguely remember reading something a few years ago that showed of the majors usd/yen when using a simple moving average crossover did significantly better than the others. whether this is still the case i dont know but without pouring over charts id guess it is

 

[nine]

Trendiness depends an awful lot on the timeframe you look for trendiness. Choosing the right one can make a big difference to strategy performance.

 

[Trader333]

Which markets trend more often/consistently

I agree with the above in that currencies tend to trend even though I prefer not to trade them.


Paul

 

[BroadSword]

I agree with the above in that currencies tend to trend even though I prefer not to trade them.


Paul

I hope you don't mind me asking, but why do you prefer not to trade currencies?

 

[options]

Currencies do trend better and smoother than anything else and are ideally suited to trend following metodologies. Commodities and long term bonds etc come a close 2nd, further down the line is Index trading, then shares.

Broadsword.

Trader333 is a nasdaq trader using the L2 for trades.

Find your niche and you stay with that, why run around trying to trade everything after you find one that suits your 'personality'.

Trading is boring after a while and becomes just another job.

The best job in the world granted, but just another job all the same.

 

[Trader333]

I hope you don't mind me asking, but why do you prefer not to trade currencies?

As a rule of thumb, markets tend to trend 25% of the time and oscillate 75% of the time. The approach I take varies on whether the market measures are indicating a trend or oscillation and in my view it is more difficult to determine this with currencies. In addition to this I prefer to position my size relative to the volatility of the instrument traded in the time frames traded. On any given day there will be stocks that will allow this to be done but it is not so easy with currencies.

At the end of the day it is down to personal preference and mine is US stocks


Paul

 

[grantx]

Hellokimchi,

It’s far simpler following one entity, eg an index, compared to any number of equities. Also, any trend of an individual equity may be subject to more frequent revision due to, amongst other things, rights issue, scrip issue, change in dividend policy, takeover, merger, acquisitions, change in stakes.

Options,

“Find your niche and you stay with that...find one that suits your 'personality'. Excellent advice.

Trader333,

I agree with Trendiness’ remark that trend depends on the timeframe. How do you differentiate between trend from oscillation?

Also, how does L2 help you? I’ve been grappling with this question but never found satisfactory or consistent answers. On a basic level, it seems to show how much business needs to execute to rise or fall (to certain levels).

Grant.

 

[BroadSword]

OK, that's understood. Thanks for explaining!

 

[Grey1]

, how does L2 help you?

.

L2 does not help much now a days. I used to use L2 for years for entry but now a days only use Advanced TA for entry and have fully automated every bit of the work ...

This is today's trade .. No L2 what so ever ..I will take the screen shot of the signals 2morrow as it is triggered...

 

[Grey1]

Hellokimchi,


I agree with Trendiness’ remark that trend depends on the timeframe. How do you differentiate between trend from oscillation

it is the effect of higher time frame cycle which forces the instruments to trend in lower time frame. In another word and a very naive statement , if the instrument is OB then the trend should start in lower time frame.

The challenge is not really in how to differentiate between oscillation and trend , the challenge is to identify the amplitude of the cycle in higher time frame @ the top / Bottom ( Over bought / Oversold levels ) .

 

[fibonelli]

Some shares do trend strongly particularly on a re-rating/de-rating of the fundamentals of a company through expansion and compression in the p/e ratio respectively.

 

[grantx]

Grey1,

Thank you for the reply.

Not a bad return for a hour's work. Just out of interest, what have you used to automate your work? I've developed a TA sytem in Excel rather than via charts but need to consider automating execution, ie buy and sell signals, plus stops.

I believe X-Trader is pretty good but I can't even get the demo to work.

Grant.

 

[Grey1]

Grey1,

Thank you for the reply.

Not a bad return for a hour's work. Just out of interest, what have you used to automate your work? I've developed a TA sytem in Excel rather than via charts but need to consider automating execution, ie buy and sell signals, plus stops.

I believe X-Trader is pretty good but I can't even get the demo to work.

Grant.

Grant,

Both my strategy and the execution has been written by a third party programmer. I have no idea how it has been done... I know there are third party offshelve execution programs such as Tradebolt which lets you easily to execute trades from TS into IB ..

Grey1

 

[pssonice]

I ve no idea what u r asking

To evaluate the trend mathematically, linear regression and quadratic regression can be applied.

the trendparameter for different instruments is different.

what u can do, is to choose a trading instrument which fits your risk at best.

the main question should be :
how to participate from this trend ?
the answer is :
u ve to trade inside or outside this trend.

 

[Lightning McQueen]

As a budding trend trader I've done a little preliminary research into the trendiness of different markets.

I have listed instruments in order of trendiness.

1. displaying the best trends, down to 10. displaying the worst.

1. Cac 40 (9)
2. Dow 30 (11)
3. EURUSD (13)
4. Nas 100 (14)
5. S&P 500 (14)
6. Dax 30 (15)
7. GBPUSD (16)
8. Ftse 250 (16)
9. Ftse 100 (20)
10. EURGBP (25)

Period of test 2006 - present, weekly chart. Figures in brackets denote whippiness as displayed by my strat (lower the figure = less whip = more trend). currently drilling down to see if this hold true in lower timeframes. and perhaps look at individual stocks if that doesn't take up too much time.

Conclusions so far...although I expected the currencies to do well here as its widely stated that they trend well, this doesn't appear to be the case...not from my view at least. Anything associated with the UK trends badly. The Cac 40 apparently is the mighty beast for the trend player to bet on, followed by Dow 30.

Is this similar to what others have found or am I going barking mad!

Discuss please...oh go on, you know you want to.

Lightning

 

[OpalSky]

...oh well, as you insist!

Lighning, what are you using for your 'trend metric' - how do you get your 9-20 figure? How do you define a trend?

(Sorry, not answering any questions - just creating more ;-( )

OS.

 

[jacinto]

10. Actually had trouble finding something with less trendiness than the ftse 100.

EURGBP has got to be the worse thing to trade

 

[Trader333]

EUR/EUR is even worse for profit although you don't incur any losses


Paul

 

[Lightning McQueen]

Hi OpalSky

With respect it wasn't my strat that was up for discussion (Im saving that for another more topical thread) rather its findings that I wished people to chew over and agree or disagree on, I realise there may be a chicken and egg situation here without knowing how the figures are derived but there you are, one lives in hope of a decent discussion on whats there.

EURGBP has got to be the worse thing to trade

Thanks, yes thats a lot worse than Ftse 100 and adds to the UK's dismal performance in my trending league table, that one ripping everything to shreds