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MadMarketScientist

Advice for All - Stop Fighting the Trend!

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I've have been watching for a correction (across all sectors) to kick in for some time now. Yet after the big down drop on this past week, why aren't I ready to get short with all my chips? Well its because the current trend is an up one, and pullbacks need to be looked at as buying opportunities, not an automatic change of trend. If there's one thing that has cost me the most money over the years, it's been trying to short the market because it has gone up “enough”, or bought because a stock has gone down “too far”. As chained-to-the-PC hyper-anxious traders, we tend to jump in on the first blip in the direction we are leaning, only to be slapped(!) when the dominant trend resumes. It definitely takes more patience to wait out a correction, but as the saying goes, “I'd rather be bored than broke”. You have to adjust your trend relativity to the time interval you are trading ... a market can be in a screaming uptrend, but even a one day correction is a downtrend on the small time frames.

 

MMS

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Just watch the markets intraday when they are moving down to see if it's a correction or a trend reversal. To me, at the moment whenever there is a correction, big buyers are lurking still. Speculator shorts dry up and get caught. Then in the next couple of days, a big move back up happens as the shorts are forced to cover. Before going short for the trend or larger correction trade, I'd have to not see that demand stepping in and for a continuation through important levels for a couple of days at least. Missing out on perfect location when trend trading is not as bad as being wrong about the reversal.

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while I agree - there is the other flipside that its more important to match the system of exits and entries....if you are short term enough then a correction may in fact be a trend :)

 

Personally I cringe when I hear the words over bought, oversold, expensive and cheap.

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...if you are short term enough then a correction may in fact be a trend :)

 

I agree. Which brings up an interesting point. What is a trend anyway? What you are saying, is that the definition of a trend is partly defined by how long a trader usually plans to stay in the trade.

 

I guess my idea of a trend is very much tied to whether price followed a high probability, typical pattern.

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I agree. Which brings up an interesting point. What is a trend anyway? What you are saying, is that the definition of a trend is partly defined by how long a trader usually plans to stay in the trade.

 

I guess my idea of a trend is very much tied to whether price followed a high probability, typical pattern.

 

if you are a day trader, then a trend lasts a day.

If you are entering on 5min charts then 12 of these might be enough to form a reasonable trend, but the hourly chart might be in chop.

so yes ..... how to define a trend is completely up the the trader, but not necessarily how long they plan to stay in the trade....you could enter on 5 min entries, and let things ride for days or months.

More important is to match what you are trying to do, in defining for yourself which trend you are trying to become friends with. Some trends are downright treacherous bas...ds.

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re: "the trend is your friend"

 

... with friends like that, who needs enemies ? ;)

 

 

///

 

... and which is a better friend for you* ?

The trend of your own 'timeframe' or the trend of 1 (or more) 'timeframe(s)' up?

 

* and I say "for you" because it really is system dependent

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if you are a day trader, then a trend lasts a day.

If you are entering on 5min charts then 12 of these might be enough to form a reasonable trend, but the hourly chart might be in chop.

so yes ..... how to define a trend is completely up the the trader, but not necessarily how long they plan to stay in the trade....you could enter on 5 min entries, and let things ride for days or months.

More important is to match what you are trying to do, in defining for yourself which trend you are trying to become friends with. Some trends are downright treacherous bas...ds.

 

for a daytrader, a trend lasts less than a day.

 

you can have a "\" day,

or a "V" day,

or a "W" day,

or a "N" day,

or a "M" day,

or an "A" day,

or a ...

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for a daytrader, a trend lasts less than a day.

 

I like to think that most "swings" are just little multi-day "trends"

 

I day trade the currency swings by getting in and out at the beginning of a new swing and then reentering after the culmination of the first multi-hour consolidation sometime after the 5 pm Chicago opening (the next day, technically speaking) and ride the continuation to the next consolidation zone. Think of it as "surfing two waves off the same storm" while never carrying risk through a market close.

 

Luv,

Phantom

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for a daytrader, a trend lasts less than a day.

 

you can have a "\" day,

or a "V" day,

or a "W" day,

or a "N" day,

or a "M" day,

or an "A" day,

or a ...

 

Yes, I agree. With something like the ES, S&P e-mini, where the smoothest trends are limited to only about an hour and a half or less in the morning, a trend can be half an hour. If you wait 5 to 10 minutes after the open to see where the ES is going, and if price gets choppy and slow at 10:30am, then you are looking at less than an hours worth of trading.

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You forgot a Z day ....oh wait time cant run backwards though I guess if you straighten the centre section you get a ledge drop ledge. (You let Siuya straighten the 7) Then there is U (cup without handle).

 

My Platitude for the day "platitudes will not improve your trading":D

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Before we get all painted into corners here, some clarification.

While Trend has not been my most trustworthy, faithful friend – it has been a growing friendship. Over the years, we have become closer. Where the bottom line is concerned, my side of the friendship is just as responsible for our results as is Trend’s. Haven't been in fights with Trend across the years as often as I've fallen into that 'don't stay' bias some of us seem to be more susceptible to than others. I've done a lot of work on that... and I’m still working on our overall relationship…

 

btw, Trend will never be a best friend. My bff is Cycle…

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Before we get all painted into corners here, some clarification.

While Trend has not been my most trustworthy, faithful friend – it has been a growing friendship. Over the years, we have become closer. Where the bottom line is concerned, my side of the friendship is just as responsible for our results as is Trend’s. Haven't been in fights with Trend across the years as often as I've fallen into that 'don't stay' bias some of us seem to be more susceptible to than others. I've done a lot of work on that... and I’m still working on our overall relationship…

 

btw, Trend will never be a best friend. My bff is Cycle…

 

zdo, I wonder if "Future Trends from Past Cyles" by Brian Millard was of any use to you then? Just thought I'd ask.

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macD,

 

Haven’t read Future Trends from Past Cycles by Brian Millard, but from looking at the TOC, it looks like an amplification / expansion of JMHurst’s published work.

Keeping this on topic... even Hurst blved that trend had more percentage weight on pricing that did cycles

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zdo, if you don't mind can you recommend any particular book when it comes to cycles. Sorry to be a little off topic, just wanted to see if you'd found anything useful. I'm at that stage in my studies. Thanks.

Edited by clmacdougall
spelling

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If you are interested from a signal processing point of view Ehlers stuff is interesting. Needs quite good maths (degree level probably). Actually most of his stuff starts with separating the cyclical component from the trending component and goes from there. Pretty much all the time (that I can recall) he uses the hillbert transform to accomplish this. Several papers and indicators on the interwebz to see if worth splashing out on his books (not that they are that expensive)

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Before we get all painted into corners here, some clarification.

While Trend has not been my most trustworthy, faithful friend – it has been a growing friendship. Over the years, we have become closer. Where the bottom line is concerned, my side of the friendship is just as responsible for our results as is Trend’s. Haven't been in fights with Trend across the years as often as I've fallen into that 'don't stay' bias some of us seem to be more susceptible to than others. I've done a lot of work on that... and I’m still working on our overall relationship…

 

btw, Trend will never be a best friend. My bff is Cycle…

 

only a psycho would want to be a friend of cycle. ;)

Edited by Tams

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Using Stochastics, Cycles & R.S.I: …to the moment of decision … by George C. Lane is the first practical material on the subject I read... at about the same time I was being exposed to all the articles about how linear cycles don't exist/ work btw. (and it's true - linear cycles are much more reliable for both volatility and volume than they are for price) . This remains the simplest ( just using your eyeballs / no fancy math) book I have on the subject.

 

But first would be JM Hurst’s The Profit Magic of …. book

 

Finally, maybe study Glenn Suprenard’s work at Cycles?? What Cycles?

Glenn is an active daytrader who has pulled out the essence and filtered the Hurst techniques down into the shorter time frames (nominal 5 day, whole day, hourly, cycles. etc)

 

I do have all of John Ehlers books but haven’t personally derived much value from them, maybe because I only skimmed them and haven’t really read them ?? ;)

 

These are the only 'large body' cycles publications I have studied…(and be aware GC Lane's book is anything but large)

 

Most of my trading is off my own theories ... these theories don't conflict with the works above, rather they complicate them beyond what is comfortable for most…have also spent time researching and coding various cycle id methods (like Hilbert, etc)

have spent most time in research, testing, nn, etc the particular conditions conducive to using 'cycles' ….hth

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only a psycho would want to be a friend of cycle.

 

:rofl:

stay out of my psychosis !

 

dude, your bff Trend is a ‘two faced’ (if not a completely multiple headed split personality) deviant. While I have had issues with fighting Trend at some points, as I discussed above, my bigger issue is with Trends’ hypocrisies … :helloooo:

Maybe Trend lies less to you than he does to me...

 

Bottom line though – only any given chart, my friend Cycle presents me with many more opportunities than does my friend Trend.

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Borrowed but well used.

 

"Because man is subject to rhythmical procedure, calculations having to do with his activities can be projected far into the future with a justification and certainty heretofore unattainable" said Ralph Nelson Elliot, the creator of Elliot Wave theory.

 

A combination of Larger & Smaller time frames would help one get the most out of an established trend and a correction.

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I made my first ever trade using an elliott wave count. I tripled my money in one trade on a sugar option in a day. But subsequently saw the elliott wave fail many times. I'm not so sure it's ideas are sound or predictive in nature, although I do agree with you that using multiple frames ( not necessarily time frames ) is essential to deciding upon bias, context and trend.

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... But subsequently saw the elliott wave fail many times. I'm not so sure it's ideas are sound or predictive in nature...

 

re EW in general

Like macD, I also went through an Elliott phase and also had some amazing, windfall ‘Elliott’ trades at the beginning, then…

 

Over the years my favorite author on the subject is definitely Glenn Neely. However, your education will not be complete without some deep study of some of the other greats – Zoran Gayer and Dominick Mazza, to name a couple (of, unfortunately for us, dead guys).

 

Some of my more cynical thoughts on the subject can be found at

Trading Chaos by Bill Williams - Page 2 | Trade2Win Forums with particular emphasis on ‘response # 144’

…response # 377 was fun too…

 

Then one day it hit me – there is not one Elliott Wave pattern (and how it unfolds for real instead of the way it’s ‘supposed’ to) that can not be fully comprehended via the Summation of Cycles principle…

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re EW in general

 

Then one day it hit me – there is not one Elliott Wave pattern (and how it unfolds for real instead of the way it’s ‘supposed’ to) that can not be fully comprehended via the Summation of Cycles principle…

 

yes - where it starts where it stops and where you are at any one particular time depends on the person and as clmacdougall says - bias, context and trend.

 

Elliot wave for me works best when it presents itself......you can often see 5 clear waves in something with a clear 3rd wave.....that is a clear alert for me the trend for those waves might be tiring..... but I never try and count the waves....I let them appear.

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