I’ve seen more than once the stat that price trends 30% of the time and ranges 70%. Somewhere recently I saw a stat of 50%.
so where do these numbers come from? What evidence is there? What’s the truth? Which market? which price? which time frame? What level of fractal self similarity?
I see intraday trends in GBP/USD almost every day. Show me a range and I’ll show you little trends within the range.
Rather than point out a post. I’ll just say it bugs me when I see vague stats with nothing to back it up.
Well, youve answered your own question. It depends on the timeframe. On the 1 hour I can almost always spot an intraday trend. On the days that are ranging on the 1 hour I can drop down to the 15 min and find smaller trends. It all depends on the timeframe you are looking on. Wanna really find out how often price trends? Open an hourly chart of the pound dollar, go back to march of 2009 and see how many total 1 hour bars there are (quite alot but we need to be more accurate than that :p), then see out of how many of them were trending bars and how many were not. This would give you a good idea of how often price trends :p. I’d do it myself but Im just too lazy to record 1 year of 1 hour candles lol.
What has been happening for the last 19 hours on GBP/USD is what I would call range bound. I can also see clear trends for the last week or so, dont feel like scrolling too far back on my charts right now
Only problem is that currencies only trend 30% of the time. The other 70% is ranging market. Parabolic SAR trades will get KILLED in a ranging market (and they redraw like crazy in ranges)
I will point out a post that states some of the numbers you are talking about. This quote is a response in a thread that begins to lay out a strategy that relies on a trending market. I am not trying to start a trend debate with the poster I have read this many times.
I have no idea where the statistics come from. So the best I think you could do would be to:
determine if your strat works in a trend or a range
define trend as it applies to your strat, time frame, and indicators you use to indicate a trend
look at data for the pair(s) you want to trade
Dont ask me for a definition of a trend in a general sense that is a well traveled road that leads nowhere:D. You have to come up with some specific parameters to define a trend in a limited data set then you can get to work. The statement the markets only trend 30% of the time is kinda useless with out a stated definition of a trend and some reference to the data used to come up with the figure. My thoughts.
you guys are reading my mind… yeah I know… it’s a short story… Reader digest condensed version… or is it cliff notes… LOL
Shr1k that’s the post from Rui’s thread that prompted me to ask. Tymen’s thread is attempting to come up with an objective definition of ‘trend’. But Ive seen the 70 30 quoted more than once and with no definition or specifics to back it up it just seems like numbers somebody pulled out of their err umm… hat, yeah that’s it… hat…
I guess it all depends on the trader him self, for me trend is when the price goes higher/lower then moves side ways after that it picks up another direction. the whole thing is a trend in my book, there for price is trendeing 100% of the time.
According to CMT Level I notes (Certified Market Technician):
“Some analysts argue that an actual trend lasts only a short time—approximately 20% of the trading period—and during the remaining time, prices remain in a consolidation or pattern formation with an indefinite trend. No one has demonstrated the validity of this percentage, however. It was estimated only by counting the time that an ADX indicator shows that a trend exists in varying markets, periods, and circumstances.”
So basically this stat is calculated with reference to the ADX indicator. It is also worth noting that this is referring to US stocks. It think this percentage would increase for forex and commodities.
It is not science, but the point is nevertheless well made… Markets don’t trend that often.
This is the reason I prefer to Swing Trade. It allows you to capture the smaller “mini-trends” rather than waiting for the giant wave.
In order to spot actual currency trend you need to look at long term chart. Trends are best spotted there. However, there are also short term trends that is when currency is going up or down on a shorter period of time. There are also daily trends showing daily direction of movement of currency
