How to determine the rally is short term or long term for stock market

#1
Dear All,

We know that we will have the different strategy for the different trend: short term VS intermediate & long term trend (short term: 4 day to 3 weeks, intermediate 3 weeks to 3 month, long term: longer than 3 month). For example: if we know the rally is intermediate trend, we will hold the stock and dont sell when trend show the weakness and may will reaction but if we think it is short term trend we will sell if we see some weakness in trend.

We also have the different stock selection for the different trend. For example, If market is rally in short, I will select high beta and high sensitive stock. if market is intermediate or long term trend, I will select stock in the Rhythm of market (good FA will plus point).

So trend determination is very important for us but I feel it is very difficult. If market move sideway for a long time and then take off we will know that this may intermediate trend or long term trend and we can use Point&Figure to calculate the target. If market dont sideway or just sideway in a short time, it is a problem.

Please kindly share your way for determination the trend whether it is long or short term

Many many thanks for your helps
 

DSM

Well-Known Member
#2
General guideline :

Short term bullish :
Price above 20 SMA but below 50 or 100 sma (pick one of your choosing)

Long term bullish
Price above 20, 50 or 100 sma

Reverse for ST/LT bearish.


Dear All,

We know that we will have the different strategy for the different trend: short term VS intermediate & long term trend (short term: 4 day to 3 weeks, intermediate 3 weeks to 3 month, long term: longer than 3 month). For example: if we know the rally is intermediate trend, we will hold the stock and dont sell when trend show the weakness and may will reaction but if we think it is short term trend we will sell if we see some weakness in trend.

We also have the different stock selection for the different trend. For example, If market is rally in short, I will select high beta and high sensitive stock. if market is intermediate or long term trend, I will select stock in the Rhythm of market (good FA will plus point).

So trend determination is very important for us but I feel it is very difficult. If market move sideway for a long time and then take off we will know that this may intermediate trend or long term trend and we can use Point&Figure to calculate the target. If market dont sideway or just sideway in a short time, it is a problem.

Please kindly share your way for determination the trend whether it is long or short term

Many many thanks for your helps
 

DSM

Well-Known Member
#4
20/50 SMA looks too simple. The mind places value for something that is complicated. This answers your question, but 20/50 SMA is not perfect, and nothing is.

To answer your question in a different manner to gauge the trend : look for HH/HL and LH/LL. And if you feel that this too cannot be used in real trading, do continute your quest, and do me a favour to PM me when you find the holy grail.

:)

thanks DSM,

theorically, We can do like that but in fact, we can not use these in real trading
 

jahan

Well-Known Member
#5
thanks DSM,

theorically, We can do like that but in fact, we can not use these in real trading
HELLO,

ur Anxiety/frustration is understandable regarding trend finding.....

what i suggest is to study Robert Miner "High probability Trading Strategies" book.

in this book he explains Various ways to find trends and counter-trends...to exact match ur query Study his dual time frame Momentum strategy.the interesting part of his strategy is u seldom/rarely face sideways market.

What DSM has said is Absolutely correct...u can't find Exact way to do that..b'coz it doesn't exits.what we have to do is Trade when the odds are in our favour.
i don't no why u said 20/50 Ma is belong to theoretical....in fact one of my Strategy is only based on pure MA crossovers.people don't believe when i say that,and they don't even understand, to be successful strategy/system is least concerned,the only important thing is ur phsycology and risk management.

Regards,
 
Last edited:

colion

Active Member
#6
Dear All,

We know that we will have the different strategy for the different trend: short term VS intermediate & long term trend (short term: 4 day to 3 weeks, intermediate 3 weeks to 3 month, long term: longer than 3 month). For example: if we know the rally is intermediate trend, we will hold the stock and dont sell when trend show the weakness and may will reaction but if we think it is short term trend we will sell if we see some weakness in trend.

We also have the different stock selection for the different trend. For example, If market is rally in short, I will select high beta and high sensitive stock. if market is intermediate or long term trend, I will select stock in the Rhythm of market (good FA will plus point).

So trend determination is very important for us but I feel it is very difficult. If market move sideway for a long time and then take off we will know that this may intermediate trend or long term trend and we can use Point&Figure to calculate the target. If market dont sideway or just sideway in a short time, it is a problem.

Please kindly share your way for determination the trend whether it is long or short term

Many many thanks for your helps
You will get as many answers to this question as there are traders. So, you should look at several methods and determine what works for the markets and time frames that you trade.

In my case, I use ADX in conjunction with other indicators such as relative position of moving averages (take your pick - SMA, EMA, WMA, Hull, etc.). You should investigate the parameters in these and other indicators so that they produce the result that you want during back testing. This requires that you determine how to define a trend from the chart. For me, higher highs and higher lows is an up trend, lower, etc. is a down trend.

As for long, short, etc. trend, I use the same approach (possibly with different parameters) on charts with the timeframe of interest (e.g., 60 minute, daily, weekly, etc.).

Adjust the parameters of your indicators for the markets and time frames that you trade until they match your definition of trend. This is key, imo, rather than just using something that you find in a forum, book, etc. which I view only as a starting point. Fortunately, with the system testing capabilities of today's software this can be a relatively quick process.
 

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