Determining direction of Markets?

[prasham]

Prasham

What is your reason of beavering the way you do ?

Nobody, which has his private system and indicators, which work for him, will just give that all away for free.

Cheap charlies or what are you locking for ?

And even the thread " Teach a men how to fish " is written from a pro which not gave away all his secrets.

Wake up and study by your self and do your home work !

DanPickUp

I understand your point but one thing that I don't understand is that what happens if you reveal all your secrets to me? Do you loose on any thing? To answer seems to be a BIG NO because in this market your loss isn't my profit or vice versa. On the other hand novice traders like me would get a quick start and we shall loose less time and money in trying things that aren't useful at all.

Like AW10 said in his above post PCR isn't a very good indicator. I would blindly follow it as I think he is quite a learned trader. Now since yesterday evening I have read and read and read an article on PCR from investopedia. I have spent some time on it but now as AW10 has enlightened me about PCR, I would let it go without trying it in the market which would save me time as well as money.

Honestly I am not asking you to post your trading secrets. Today trading in Indian Stock Market has become very clumsy for novice traders like me as there are lot many indicators and not many people fully understand potential of these indicators. Hence often novice traders get trapped using wrong indicators or using a good indicator wrongly.

A simple line of advice that "X" indicator is good should be enough for most of us. I would learn about it on my own but a hint from experienced guys could save us from lot of troubles as I mentioned above

 

[sbhav]

I understand your point but one thing that I don't understand is that what happens if you reveal all your secrets to me? Do you loose on any thing? To answer seems to be a BIG NO because in this market your loss isn't my profit or vice versa. On the other hand novice traders like me would get a quick start and we shall loose less time and money in trying things that aren't useful at all.

Like AW10 said in his above post PCR isn't a very good indicator. I would blindly follow it as I think he is quite a learned trader. Now since yesterday evening I have read and read and read an article on PCR from investopedia. I have spent some time on it but now as AW10 has enlightened me about PCR, I would let it go without trying it in the market which would save me time as well as money.

Honestly I am not asking you to post your trading secrets. Today trading in Indian Stock Market has become very clumsy for novice traders like me as there are lot many indicators and not many people fully understand potential of these indicators. Hence often novice traders get trapped using wrong indicators or using a good indicator wrongly.

A simple line of advice that "X" indicator is good should be enough for most of us. I would learn about it on my own but a hint from experienced guys could save us from lot of troubles as I mentioned above

hi prasham,

i understand that you want to make quicker steps towards trading.

but only if you know what is bad you can segregate the good.

not any indicator is bad at the sametime not every indicator is good.
it is in the hands of the user to improvise and use the indicator.

an indicator good enough for one person maynot be that good enough for another one.reason is stock trading is mind game,it depends on your mind and approach.stock market is a culmination of many minds and many approaches.
open your mind to all the indicators and get to know them,who knows ,you might make a useless indicator an awesome one if you get any nice idea.

after all nothing wrong in gaining knowledge about all the indicators and there are not too many indicators around us.

hope you get my point,
welcome to the wonderful world of indicators.

sbhav.

 

[prasham]

@Sbhav: This thread is about deciding direction of Markets by large. Its not about particular stocks. So there are lot many indicators.

 

[sudoku1]

I understand your point but one thing that I don't understand is that what happens if you reveal all your secrets to me? Do you loose on any thing? To answer seems to be a BIG NO because in this market your loss isn't my profit or vice versa. On the other hand novice traders like me would get a quick start and we shall loose less time and money in trying things that aren't useful at all.

Like AW10 said in his above post PCR isn't a very good indicator. I would blindly follow it as I think he is quite a learned trader. Now since yesterday evening I have read and read and read an article on PCR from investopedia. I have spent some time on it but now as AW10 has enlightened me about PCR, I would let it go without trying it in the market which would save me time as well as money.

Honestly I am not asking you to post your trading secrets. Today trading in Indian Stock Market has become very clumsy for novice traders like me as there are lot many indicators and not many people fully understand potential of these indicators. Hence often novice traders get trapped using wrong indicators or using a good indicator wrongly.

A simple line of advice that "X" indicator is good should be enough for most of us. I would learn about it on my own but a hint from experienced guys could save us from lot of troubles as I mentioned above

a same set of same time frame indicators followed by a set of traders will result in dif output for each trader !

 

[prasham]

chk out the thread by SAINT titled - "teach a man to fish...".. There is PDF also available of same thread.. It tell u an approach of identifying trend without any indicator.. but using only reliable and fastest indicator that u can get - that is PRICE.

Very well said. I just saw the contents of that .pdf file. So according to you trendlines are the fastest and reliable indicators of market directions?

 

[DanPickUp]

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[AW10]

Prasham, you will not find THE SINGLE BEST INDICATOR THAT WORKS 100% of the time.

There are many approaches and Trend Line is certainly one of them. But keep in mind, there are times when TLines will break and will not work. So you need to develop that knowledge and skills to identify when TL is working and when it has stopped working.
(i think u have missed the cream of "teach a man .." pdf i.e. PIVOTS).

Similarly, one trader will use TL as primary tool.. and other might throw it away saying it is crap, there are too many Trlines on the chart and I don't konw how to trade it.. so TL doesn't work for me.
In my view, it just means that TL trading doesn't suit the particular trader.

In same way, what I said about PCR is my views.. but u have read article from some one and probablly it is working perfectly for him.

Welcome to this grey and foggy world of trading Dear. There is no black and white answer here. It is upto you to find your way in this fog and still head in right direction.

What DanPickUp has mentioned is that this type of answer doesn't come free of cost. There are mentors and quick money making teachers out there who will charge few thousands for it.. So you either pay the cost to gain that knowledge thru money, or through your time by reading and exploring.

All the best.

 

[AW10]

Hy

Trend determination is obviously important for trend followers, but anyone trading in any style should be aware of the trend in the market they are trading. The overall trend can influence your trading style. If the trend is up, you probably will have a different way you treat buy signals from counter trend sell signals. If the trend is sideways, then applying a trend following method would be frustrating and probably not profitable. A downtrend in certain markets can have a different character than an uptrend. Beginnings of trends can be easier to trade than end of trends, in many cases. Therefore, it is important to know what the trend is.

But to complicate matters, there can be many trends at play in the same market, even on the same chart. There are trends within trends. Different period lengths on moving averages, or indicator inputs, can signal a different, often confusing and conflicting trend. There can be a counter trend down move on a 30-minute chart, while the daily chart is showing a powerful uptrend, while the monthly chart is showing a sideways trend. When they all line up, it is the most comfortable and reassuring time to take a trade, but if you wait for everything to be in synch you would probably trade very little, and often not in a timely manner. And often the comfortable and easy trade is the one everyone sees, and it often turns out to be untimely. It is best to keep it simple and just trade off the time frame of the chart you are analyzing.

Most of us want indicators to guide us, as indicators are quantifiable. We can lean on them with more confidence. However, the purest and fastest way to determine trend is just through studying the price structure like AW10 already posted. Price does not lag. Price is not derived from anything. It is current. It might frustrate, but it doesn't lie.

The easiest way to define a trend using price structure is by observing high and low swing points. Swing points, or pivot points, are price bars that have a high point surrounded by two or three lower highs on either side, or a low price bar surrounded by two or three higher lows on either side.

However you define the swing point, the idea is to have a series of prices that keep taking out the previous swing point in one direction. This is the same theory of a market making higher highs and higher lows, although this isn't always exactly true. Sometimes a pause will form in the price structure and prices temporarily go opposite to the trend, with the market making a lower high, but as long as a lower low is not taken out the uptrend is still intact.

These swing points are important to the price structure because they mark where prices stopped and reversed, at least momentarily. The market can then re-test these areas to see if price gets turned back again, or if price can overcome the previous resistance point and move beyond. The market is constantly testing whether trade is accepting or rejecting price and these swing points are the reference points for these tests.

I have not found any trend following indicators or approaches to be profitable as a stand- alone system. But I have found it not profitable trading against the trend. Therefore I want to know the most probable direction of the current trend of the market and time frame I am trading. Then I can enter on pullbacks against the trend, but always in the direction of the trend. It might be gratifying to pick a top or bottom of a market, but there will most likely be higher odds of success in going with the flow of the trend. If you jump into a raging river you can either flow with the current effortlessly, or swim like mad trying to go upstream. Usually the best you can do is stay where you are. So know the trend, and trade only in that direction.

DanPickUp

So Dan, you have revealed the secrete that I was holding from last few days.
Beautifully written post.

thanks for sharing it

Happy Trend Trading

 

[Placebo]

There is no direct answer to this question.There are so many different ways of determining a trend that you can put 100 different traders in the same room and all of them would participate in the same trend but the entry point would differ depending on their criteria and risk profile.

Here is a simple and stupid example : Take any simple moving average , EMA , Weighted Average etc of your choice and see where it is. If price is below the average the trend is down if not then above. Its as simple as that but the trick is in trading it and making something out of it.

We all have heard this thing "NEVER TRADE AGAINST THE TREND" and we also know that it order to make a profit you ought to buy low -sell high and vice-versa. These two statements are countermanding . If you want to buy cheap then the purchase should be made in a downtrend and vice-versa.

So we actually need to open up a position in the opposite direction.To do this excellent money management techniques have to be used because the level of risk is quite high here.But that's the whole point of speculation. Taking high risks in anticipation of higher returns.

So while you are studying and trying to figure out which method suits your profile , do not forget to work on money management at the same time. Money management and technical entry go hand in hand.

Cheers and Happy Trading

 

[AW10]

We all have heard this thing "NEVER TRADE AGAINST THE TREND" and we also know that it order to make a profit you ought to buy low -sell high and vice-versa. These two statements are countermanding . If you want to buy cheap then the purchase should be made in a downtrend and vice-versa.

lnangia, my version will be..buy - low, sell - high, or buy-high and sell-higher.
and vice versa for short.

We don't have to buy low (hence counter-trend entry) to make money.. We can very well buy high .. as long as prices are going to higher level, that will also make money for us.

So second part of my modified version becomes trend followers version.

First part (buy-low, sell-high) is obviously more beneficial but it needs lot more skill to go counter-trend. For newbee better to stick with trend and not predict the low and high.

Happy Trading