How to Identify a Trend Day Early

TradeOptions

Well-Known Member
#1
Sir the trend today after open was clearly up. The strong finish has only showed a change in direction. Market can move 100s of points without making a bottom or top we should just trade the direction of the trend. As of today the trend is up.
I agree we should mostly go with the trend, except in exceptional cases. Today I won't call a trend day, just a technical bounce. I did not trade today because bounces like these can be very dangerous for stop loss. :D

Was just watching the screen and planning lots of trade in mind for future use. I have selected few stocks for put buying etc.
Sir, Most of us here trade the smaller time frame. So on a 3/5 minute chart, today would be considered a trend day. However, if you looked at larger Tf like the daily, it appears like a pull back day from an oversold area of support.
Dear friends, we all seem to have different ways to look at the market. Some says it was a trend day in Nifty, while other do not think so.

I want to know, if there could be some method by which we can Quantify the Intraday Chart of 5 Min Timeframe and clearly say that if these conditions are met, then this day qualify as a Trend Day or if such conditions are there, then it qualifies as a Choppy or Non Trend Day.

ST sir has also mentioned many times that we must keep the Market State in mind, for using ATR based stops etc. During different market states, we need to use the tools differently. So I am trying to quantify these 2 Market States - Trendy Vs Choppy, based on intraday 5 min bars data.

Thank you so much.

Best Regards
 

TradeOptions

Well-Known Member
#2
Views shared by NoviceStockTrader and Just-Trade

Trend:A pattern of gradual change in a condition, output, or process, or an average or general tendency of a series of data points to move in a certain direction over time


Trend is different on all time frames. So, If you see a series of higher highs and higher lows then you are in an uptrend and the opposite for down trend. How you trade the trend depends on the trader. Some people trade breakouts, some pull backs. If you see 5 min Nifty spot chart today then you can easily identify about 7-8 Higher highs and 6-7 higher lows.
If you'll see today's chart carefully you will find a clue why bearish could not overcome bullish view todat. By morning 10 AM bearish view had well challenged the bullish view but 1045 to 1100 hrs candles shattered all the hopes of bearish. After many times bearish sentiment came at major resistance 8100-8110 but due to severe previous blow no one dared to go for it. And ultimately bullish somehow cleared the major resistance 8110.

Just-Trade
 

TradeOptions

Well-Known Member
#3
Post by Smart_trade sir, on this topic.

Originally Posted by Smart_trade

HOW TO IDENTIFY A TRENDING DAY

I had posted silmilar post in miniflow thread some months back,tried to locate it but it seems to

have got burried...

Nobody can identify a strong trending day before the day starts...but as the day's market action

progresses, it can be identified with fair accuracy. Some of the tell-a- tale signs of strong up

trending day are as under : Mirror image for down trending day.

1) Strong up day starts near the bottom of the day's range and closes near the top of the range

both within bottom/top 20%. This means that the market does not retrace much after opening and

quickly gets down to its business.

2) Strong up days are made of 1-2 Wide Range Bars ( WRBs)with large volumes.

3) In up trending day the rallies will be have more volumes than declining bars.

4) In uptrending day, there are no frequent reversals.

5) Market overall is strong and broadbased meaning there is strong move in many stocks/indices.

6) In uptrend day market does not retrace much....retracements are small and market gains the

retraced ground fast.It is my thumb rule that if the market in-between retraces more than 25

points in Nifty Futures from its intraday top,chances of strong up day are remote.

7) In strong up day market gallops after 2:00 -2:30....and rises very fast from 2:45 to 3:10....and

may retrace some ground gained afterwards.

We daytraders must have some large trend days on our side ,where holding till end and adding

on every dip is all we need to do , to keep us on winning side.

Best wishes,

Smart_trade
 

TradeOptions

Well-Known Member
#4
From Brett Steenbarger blog - Identifying the Trend of Market Sentiment With the NYSE TICK: A Best Practice in Trading

http://traderfeed.blogspot.in/2007/02/identifying-trend-of-market-sentiment.html
Here is a best practice that will help you identify the trend of the market's sentiment in a single glance. It is a simple way of calculating the Adjusted NYSE TICK, as reported daily in the Trading Psychology Weblog.

In past posts, I have described the use of the NYSE TICK as a real-time measure of market sentiment. Because it captures the number of stocks trading at their offer price minus those trading at their bid at each point in time, it illustrates whether buyers are more aggressive in the broad market (they are accepting the offer price to get into stocks) or whether sellers are more urgent (accepting the bid price to get out of stocks). The NYSE TICK, when cumulated over time, is helpful in anticipating momentum effects in the market and in determining whether or not we're likely to hit pivot-based price targets. For this reason, a number of very nice setups can be identified using TICK, price, and volume.

The chart above, taken from e-Signal, is of the NYSE TICK on a 1-minute basis. Notice that the TICK values, displayed in candlestick bars, are accompanied by three horizontal lines. The first line, in red at the center, is the regression line over the past day of trading (i.e., the past 405 bars). This line is the best fit connecting the high-low-closes for each bar over that period. The blue lines above and below the TICK bars represent values that are two standard deviations above and below the regression line. When the TICK exceeds these levels, we know that an unusually large amount of buying or selling is occurring simultaneously among the NYSE stocks. Very often this is because program trading is hitting the market.

Note that, by looking a 3-minute or 5-minute bars, we can adjust the lookback period for the regression line and the standard deviation calculations, since the lines will always be based on the past 405 bars. I generally use a lookback period that corresponds to a relatively flat market condition (e.g., if the market has been flat over the past three trading sessions I'll look at a 3-minute bar of TICK), because that tells me the net buying vs. selling sentiment needed to sustain zero price change. If new TICK values consistently exceed the value represented by the regression line, that signals a shift toward bullish sentiment, and I would be leaning toward buying pullbacks in the TICK (i.e., pullbacks toward the lower blue line). If TICK values consistently fall short of the regression line value, that would indicate a shift toward bearish sentiment, and I would lean toward selling bounces in the TICK (i.e., upthrusts toward the upper blue line). When TICK oscillates evenly around the regression line, we often will have range bound conditions.

The key visual identification is the slope of the regression line for the NYSE TICK. If the slope is positive (the line is rising), we have increasing buying sentiment over time and vice versa. The slope of the regression line--and particularly a change in the slope--informs us of the trend of market sentiment. This is very useful in identifying shifts in the market's trend. In the above example, the slope is steadily rising and that--all other things being equal--would lead me to buy dips in the TICK that do not make fresh price lows. That would be one way to buy pullbacks in an upward trend.

Viewing the NYSE TICK-based sentiment in this fashion, you can filter your own entry signals. For instance, you might identify a bullish configuration in a chart pattern or in a CCI pattern, but only take that trade if the slope of the TICK (the sentiment trend) is positive. Many, many times the TICK distribution--the direction of the line--has kept me out of a bad trade by forcing me to go with the dominant market sentiment (which is set by the large traders). This is why identifying the trend of sentiment is, for me, a best practice.
 

TradeOptions

Well-Known Member
#5
From Brett Steenbarger blog - Four Keys to an Upside Trend Day

http://traderfeed.blogspot.in/2014/05/four-keys-to-upside-trend-day.html
For daytraders as well as swing traders, identifying a trend day early in its lifespan can be a profitable strategy. Here are four things I look for in identifying upward trend days, such as we had on Monday:

1) The cumulative NYSE TICK on the day stays positive and rising through the session;

2) The percentage of NYSE stocks trading above their day's VWAP remains above 50% through the session (see chart above);

3) The number of NYSE stocks making new daily session highs vs. fresh daily session lows remains positive throughout the session;

4) Major indexes stay above their opening price ranges throughout the session;

Not all of these conditions will fire perfectly on each uptrending occasion, but most of them will. Note that each of the conditions is measuring an initial thrust upward and then sustained buying pressure with consistent, positive breadth. The key is recognizing these conditions relatively early in the trading session. I obtain my data from my e-Signal feed and use historical research to identify the degree of thrust and buying pressure that is most likely to lead to a trending outcome.

Note that the failure to meet the above conditions can also serve as an alert to a potential range day. Identifying likely day structure as early in the session as possible is a very helpful skill for traders on the day timeframe.
 

TradeOptions

Well-Known Member
#6
Post by Smart_trade sir

Posting in this thread after a long time.

Market Types - Nontrending or Sideways and Trending.

Any market at any point of time on any timeframe can be classified as Non trending or sideways market and Trending markets.Each type of market requires a different way to trade it.Any trader with sufficient screen and chart experience knows what type of market we are in....let us see how one trades them.

1) Siideways or Nontrending markets.These markets oscillate between the upper range and lower range so the way to trade them is buy near the lower range and sell near the upper range.This could be achieved by trading on VWAP bands,failures of the boundaries breakouts etc.

2) Trending Markets : Trending market could be devided into strongly trending markets like the ones we are having for last couple of days or weak but definite trends which we were having for last few days.

Once we know that we are in weak trends,trading breakouts in such trends will invite more stops being hit...as the trend is weak, the moment we buy a breakout,the market goes up a little and starts its intermittent correction and hits our stoploss if it is kept too low...the correct way to trade is if we are in a weak uptrend,don't buy breakouts...weak uptrend will give 25-30 points correction in Nifty Fut and if we buy here and keep a stoploss of 20 points, there is a good chance that the trade will work and we get into the weak but definite trends......

In strong trends,buying breakouts is a good way of trading but better RR is achieved if you buy a 15-20 ( again taking example of nifty future )points dip and keep stoploss of 20 points below our entry.On a strong trend day we will get shallow corrections so don't wait for deeper corrections..One can also buy 50% on breakouts and 50 % on shallow corrections that if correction does not come we have some position in place.

One day the trend is going to reverse and we will hit our 20 points stoploss but before that we will be riding the trend and put sufficient points in our pocket already. On reversing the trend, we reverse the above process, so instead of buying dips and corrections we look to sell rallies...

If traders follow the above, they don't need fancy softwares,systems .A simple price chart will do and we will have more profitable traders.

The above is no great discovery ,nor it is a rocket science....a simple observations and methods work the best in the markets...

Smart_trade
 

Jeremy

New Member
#7
It is easier to predict the trend when you follow the news and other economic indicators. These have more force than technical indicators when used to predict market trend.
 
#8
One can use Bollinger band to identify the trend easily in any time frame.

Also price action with Bollinger band work fine in intraday. Good success rate.

Davincy
 

Rito

New Member
#9
One can use Bollinger band to identify the trend easily in any time frame.

Also price action with Bollinger band work fine in intraday. Good success rate.

Davincy
Bollinger Bands are not a standalone trading system. It should be used with two or three other non-correlated indicators that provide more direct market signals like moving average divergence/convergence (MACD), on-balance volume and relative strength index (RSI).

Copied from -
http://www.investopedia.com/terms/b/bollingerbands.asp
 

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