The finest in trend trading - DEBUNKED

[jaquille]

I agree entirely about the problems in comparing anything to an arbitary reference point. The same problems exist when comparing price to a bar open or close, or daily high or low, or pivot or fib line, or indicator etc.

The issue that you are avoiding which I mentioned in my first post is the kurtosis in the distribution of market moves. Extended moves occur far more frequently than you might predict, and the reasons behind those moves, in terms of crowd behaviour are well understood.

If trends did not exist, we’d see a normal distribution in returns. However, we see deviations of 4,5,6 sigma occurring time after time, and across numerous time horizons, those moves do not occur by random chance, they occur because there’s a bias in the behaviour of market participants, and thats a trend.

Maybe its a question of semantics, but I’d argue that the presence of kurtosis in the distribution of returns is a definitive proof that non random crowd participation occurs, and therefore trends exists.

Questions as to how that trend can be identified and exploited in real time are another matter altogether.

I am not avoiding anything except those posts and people that have the intention of getting this thread closed.

I stated the purpose of this thread in post #1.

To disprove my assertion you have to show that “trend” exists in other than a conceptual form.

“If trends did not exist, we’d see a normal distribution in returns.” That is a false statement. It is false because it is dependent upon the sample size or the period examined. Adding one more element or more time to the sample size could completely change the conclusion.

[mastergunner99]

What we can’t say with certainty is the direction of price will travel in the future. Isn’t the purpose of “trend” to determine the direction price will travel in the future so you can trade with the “trend” and let “trend” be your friend?

Trend suggests price direction. No one stated that it is with certainty that price will absolutely go in that direction. For that matter, the market exists because no one can say with certainty which direction price will take.

Therefore, it is all subjective. It is all speculation. Right or wrong in the market is determined by profitability or lack thereof.

Is trend is a myth, all trading is a myth because everyone entered into the the market based on what the “illusion” that was created by what they saw.

[jaquille]

The idea of having absolutes in a trend is the mythical part.

I agree in part.

The fact that for a certain amount of time price moved up or down, whether short term, or long, is a reality.

I agree.

The only subjective part to it at all, is when one called a move started, and when one calls it over.

Exactly.

Glad to see this back on track:D

So am I. Though a certain unwanted individual is still posting in here.

[jaquille]

Of course it’s relative. That’s the entire point of trading. Your own strategy is subjective. You trade the break out of two candles on what the 1Hr chart I believe it was. That matters nothing to the man that trades on the 5min chart, or myself on the daily chart.

Have you not referenced the weekend open? That matters nothing to a man trading on a monthly chart.

Trading is all relative. If it wasn’t, there wouldn’t be a market to exist in the first place. What you see is what you see.

If a trend is a myth, then your trading is just as much as a myth.

mastergunner99, please do not post in this thread.

[simbafx]

Isn’t the purpose of “trend” to determine the direction price will travel in the future so you can trade with the “trend” and let “trend” be your friend?

Absolutely not, where do yet these ridiculous ideas from ?

[jaquille]

Absolutely not, where do yet these ridiculous ideas from ?

From people in the form of books, forums, seminars, etc…

[simbafx]

“If trends did not exist, we’d see a normal distribution in returns.” That is a false statement. It is false because it is dependent upon the sample size or the period examined. Adding one more element or more time to the sample size could completely change the conclusion.

With respect to sample size, I’m sure that we’d both agree that we’d need to add a constraint that the sample size must be sufficient to yield statistically significant data.

With respect to the period being examined, why not examine all possible data available ? If you insist on randomly sampling timeseries data, the magnitude of the kurtosis may well change, but its still there. Ignoring this is the equivelent of you arguing theres no fish in the sea, on the basis of sampling a cubic metre of water and not finding a fish.

However you slice this, you’ll find the same thing. Look at the distribution in the length of artificially constructed bars, look at tick bars, look at daily range, if you really dont believe me take random trades over set time periods and look at the distribution of profit and loss, and you’ll see the same statistical property being exhibited. You wont find a normal distribution however hard you look, you’ll find fat tails, caused by bias in market participants, and when those participants act in unison, it results in a TREND.

If you go out in a boat, with an appropriately sized net for the species you wish to catch, you stand a good chance of catching a fish. If you trade a trend following method, with appropriate parameters, you stand a reasonable chance of catching a trend !

[jaquille]

simbafx your arguments are well constructed and thought out. You leave out 2 crucial facts: There is no agreement on a precise definition of “trend” nor what the “trend” is at the moment.

One other point that I need to make, I am not skewing anything in my assertion that “trend” is a concept and exists only in the minds of traders. I am not sampling a cubic meter of water and claiming there are no fish. I am looking at all of the oceans.

[Sweet_Pip]

Part of the problem is how “trend” is represented in trading. Most traders use chart. They draw lines on the charts to show “trend”. The market can exist without charts. Can you say the same for “trend”? If yes, then define “trend” without a reference to a chart.

We can say with certainty the direction of price between any 2 points IN THE PAST. Is that “trend”? We can with certainty the direction of price between a point in the past and the current price. Is that also “trend”? What we can’t say with certainty is the direction of price will travel in the future. Isn’t the purpose of “trend” to determine the direction price will travel in the future so you can trade with the “trend” and let “trend” be your friend?

I don’t think trend has a purpose…it just IS. Determining the direction price “may” travel is the purpose of technical analysis.

I agree that most methods of identifying a trend are doomed to failure with giving as many false signals as true ones. The vast majority of them only use lagging indicators which shows current data as it relates to past data for the lookback period and that includes trendlines, channels, moving averages etc. I know I’ve seen many charts with cherry-picked “after the fact” examples which when applied real time quite often don’t work out.

However, it’s not the trends fault.

I do feel I have a method that can objectively identify trend direction, and determine if it’s in the early or late stages…the structure position of any market and timeframe.

[jaquille]

I do feel I have a method that can objectively identify trend direction, and determine if it’s in the early or late stages…the structure position of any market and timeframe.

Which, if any, of your threads contains this method?

[mastergunner99]

I agree that most methods of identifying a trend are doomed to failure with giving as many false signals as true ones. The vast majority of them only use lagging indicators which shows current data as it relates to past data for the lookback period and that includes trendlines, channels, moving averages etc. I know I’ve seen many charts with cherry-picked “after the fact” examples which when applied real time quite often don’t work out.

However, it’s not the trends fault.

I’m in agreeance here. It’s the trader’s failure of properly trading the trend that can result in loss. Granted, “proper” is entirely subjective here. I personally don’t need indicators to tell me the direction of price. Price alone tells me where it’s looking to go. I do however use trend-lines to help determine areas where a trend is looking to reverse or come to an end.

[akeakamai]

Everyone is buying and selling based on their own subjective beliefs about the market. Price moves how it moves because that’s how beliefs change.

Sometimes traders are poorly positioned however, and their beliefs are conquered by the opposing camp (longs/shorts) due to superior positioning/capital. There are many reasons why traders choose to take poor positions, some actually understand the risk and are aiming for larger targets, but most are trading in an emotional frenzy of some sort and if the opposite camp spots this, they can be taken advantage of, and their position wiped out (along with the transfer of profits to the winning camp)

What appears to be a (let’s say up)trend is just traders in the long camp taking up long positions at favourable areas, this pattern is self-fulfilling as new highs are reached, and thus give reason for favourable long positioning on the retrace. When price fails to make new highs (in this scenario) then things get a little more chaotic as both camps try and figure out where a “good position” lies price-wise. Always keep in mind this is competition for FAVOURABLE positions, there is never any guarantee that price will continue upward just because new highs are reached, that’s where trading gets really subjective and experience takes over.

Make sense jaquille et al?

[system]

Everyone is buying and selling based on their own subjective beliefs about the market.

I don’t know, does it?

Value is what’s sought after, is it not?
The price is right & quality of the participation is ensured.

Price moves how it moves because that’s how beliefs change.

I don’t know, does it?

You are dealing with human emotion & human decision making when you are participating in these markets.
The majority of humans are creatures of habit.
It gives them a sense of comfort when dealing with familiarity.
Habit & familiarity doesn’t gett tossed aside all of a sudden when dealing with money.

Price & how it moves is a creature of habit & familiarity.

Sometimes traders are poorly positioned however, and their beliefs are conquered by the opposing camp (longs/shorts) due to superior positioning/capital.

What’s poor positioning?

The market has proven you wrong & you are still engaged because of your poor decision making process & lack of Trade Risk Strategy employed.

What are their beliefs?
That the market will turn around & prove them right?

Or is it this folly believing that they can control markets?

There are many reasons why traders choose to take poor positions, some actually understand the risk and are aiming for larger targets, but most are trading in an emotional frenzy of some sort and if the opposite camp spots this, they can be taken advantage of, and their position wiped out (along with the transfer of profits to the winning camp)

There is one reason for poor positions.
The market has proven the position wrong.

The position needs to be killed & taken off according to the trade risk strategy employed!

Emotional frenzy has no place in trading.
Whoever get’s to that place is at the wrong place & doing the wrong thing or not cut out for this trading deal.

What appears to be a (let’s say up)trend is just traders in the long camp taking up long positions at favourable areas, this pattern is self-fulfilling as new highs are reached, and thus give reason for favourable long positioning on the retrace. When price fails to make new highs (in this scenario) then things get a little more chaotic as both camps try and figure out where a “good position” lies price-wise. Always keep in mind this is competition for FAVOURABLE positions, there is never any guarantee that price will continue upward just because new highs are reached, that’s where trading gets really subjective and experience takes over.

Trading can be as simple or as complex as you choose to make it.

[jaquille]

the GMMA reveals much more about the character of the trend than just 2 moving averages.
The MMACD is the average of the 2 sets as you mention…

sum of longs = long average.
sum of shorts = short average.

These are now put in MACD form to create the MMACD.
More about this is to come - see the new posts.

We are supposed to believe adding averages tells us something about “trend”? :rolleyes:

[jaquille]

Trading can be as simple or as complex as you choose to make it.

Those who make it simple are ostracized. :mad:

Those who make it complex are worshiped. :eek:

[simbafx]

We are supposed to believe adding averages tells us something about “trend”? :rolleyes:

I must admit, I did laugh out loud at the multiple MACD concept. Had I not witnessed it with my own eye’s, I would not have believed it possible.

[jaquille]

Now I will post a few more trades to show how the GMMA works together with the MMACD.

I am going to keep the trades short so that I can zoom in to both the entries and exits.
(if I take a longer trade, the close-ups will not fit on the screen).

When I post the computer code for the MMACD, you will be able to see much longer trades for yourself.

Tymen is posting trades [B][I]AFTER THE FACT[/I][/B] in his " The finest in trend trading" thread. :mad:

On the MMTT and CHEETAH threads, I post trade setups [B][I]BEFORE THEY TRIGGER[/I][/B] then I post what happened.

YOU BE THE JUDGE! :rolleyes:

[Master_Tang]

Is that trend related?

[shandy]

Is that trend related?

Nope, but does lay bare the real agenda behind this thread…

[shandy]

Whoa whoa whoa Mr Excitable. That to me is a long list of areas to consider. And as you looked at this pair (or any pair) through the timeframes you would be able to add a whole lot more areas where price broke through or reversed - 4 hour high, 1 hour high, 5 min high…etc etc. Why should any of these levels be relevant, or not? Which is more relevant? Why is this list of possibilities any different to the numerous trends you refer to and have tried so hard to debunk? Your way of trading is as subjective as any other, just you use horizontal lines instead of ones with an angle.

The best methods of trading use a confluence of reasons to trade, and don’t care which is the best, accepting that each adds to the possibility of a trade being a winner. By doing so you are increasing the pool of traders likely to trade in “your” direction. If you use just one your odds decrease, as the pool of like minded traders is smaller.

Get off that high horse and learn to accept there is more than one way to skin a cat.

Mr Used, don’t believe you replied to this, could you please explain how “your” method is any simpler, or less complex than any other?