The Trend is a Lie

Does divergence always work? NO.

Good question.

There is positive and negative divergence.

What is leading?

The point was to have a discussion. Take from this what you want.

While I agree with you that a trend can turn around at any time, the idea that a looking at how a market trends is useless, presumes that market price is random. The very fact that humans trade, and therefore look for identifiable patterns and trends, means that they become a self fulfiling prophecy.
If you looked at a chart for the first time you would probably see chaos but a bit of study would show that the market often,but not always, moves in predictable patterns, otherwise there would be no point in trading

I’m just not sure what the problem is :slight_smile:
MAs lag but that doesn’t have to be a bad thing depending on your method.
Noone wins with a crossover method unless they are willing to take a huge drawdown but that doesn’t mean you can’t use MAs as a guide for stuff.
Even candle patterns lag because you have to wait for the pattern - so what, you can wait for price to come back a bit or enter a bit late, no biggy if you set your targets and risk correctly.
So the trend is down, it breaks out of its trendline, you trade you get your pips - profit. Now you know there might be a change of sentiment, you wait for price to retest or form a new trendline, when it reaches your trendline, you get a candle pattern or a new breakout, more pips.
If it’s ranging, there’s no trend, trade support and resistance. Excellent.

Would you agree that most traders focus on the 20/50/100/200 ema’s because they figure most other traders watch these same moving averages?

Then you have those trend traders who do great on the runaway trends but get NAILED as soon as sideways consolidation happens. Most cop out by running to another indicator in an attempt to filter bad trades.

Do they? Most traders, most cop out… - over generalisations.
I’m not so sure about this, most successful traders don’t use these as the single reason to enter a trade, it assists them.

You have a lower high after an uptrend. therefore a down trend is confirmed

I really think TIMEFRAME is the key to this whole discussion. Price action can be watched on any timeframe, thus an hourly chart’s signals are going to ‘lag’ .vs. a five minute chart.
E.G. Say we’re trading a reversal, & one person’s watching a 5m chart & another’s watching a H1 chart… The two traders can essentially end up trading the same reversal (albeit rarely.) Price reverses downward at X.3…(X being whatever you want.) Most recent support on the 5m chart is X.15, however on the H1 chart most recent support is X…
Obviously the longer timeframe is going to offer more pips, but require more risk… Now, most would agree that more time = more data = more reliable.
So honestly, while I agree price is the most pure detail to watch while trading, timeframe must be accounted for in order to properly interpret the action at hand.
E.G. a 5m candle CAN be 200 pips, but trading a 5m chart would merit an exit after a run of that proportion, however, that same 200 pip spike could merely be the entry for another individual who’s watching an H1 chart.


…is it just me? Or does it seem like my above example can (generically) consist of four types of traders?

Short term/Low risk traders - wondering why anyone in their right mind would take large risk with large size or large stops or both.

Short term/High risk traders - saying ‘muah ha ha ha.’ I’m SO profitable!

Long term/Low risk traders - wondering why anyone in their right mind would take large risk with large size or so many trades or both.

Long term/High risk traders - saying ‘muah ha ha ha.’ I’m SO profitable!

Good discussion points guys… thanks for bringing it back from the brink of failure.

The only reason I personally even started looking at the concept of “trends” was because I found that once I took every single momentum indicator off my charts is when I did a v-reversal in my equity curve. Because I was no longer using additional information to “filter” and waiting around for a line to do X, Y, and Z to get me into a move that had already started 20 bars ago…

Obviously everyone trades and interprets charts differently and need different tools to trade, I just found that personally, I was 100X’s more effective with only pure price action on my charts and prior S/R.

As far as price action (candlestick, etc) lagging… it is an interesting concept actually… because I guess to a certain extent it does lag? But then again, on the close of each bar you know with 110% cetainty of a signal does or doesn’t exisist, so if you know what your trade is going to be at the open of the next candle on the chart its (IMO) one of the least lagging indicators out there.

Thanks for the positive discussions folks.

I think we all have to determine what we can recognize from the price bar and the prior bars…

For some it is easier to see that there are, say, lower highs and lower lows or whatever, others need indicators as they have not learned to perceive what is happening…

As soon as you get the indicators out of the way, you have freedom to get in sync with the market.

Trend is relative - it depends on where you start from.

If you ask me, if there were to be an indicator that was slighly useful, it would be one that, on a longer term chart, could plot a buy signal in the even that price moved more than 10pips in 10 seconds.

It’s the bursts that need to be watched. The chart irons out the time factor.