Very hard question, What is a trend?

[TraderABC]

Hi all. Please don't laugh, this question is harder then it seems. What is a trend?
How long is it supposed to last? How do you know that it has just started? How many candles? Are there trends on lower level chart or is it just noise? If so, why isn't long term trend a "bigger noise" (and less predictable than on shorter timeframes) ? It is very easy to talk after it has happened, it is very easy to claim that "I won so and so because I jumped on a trend". But how do you know beforehand that you have a trend? When you play trend following strategies how do you know the main trend and same goes for anti-trend strategies...

[123qwerty]

A trend is a sustained movement in price in a direction over a period of time. Trend is a relative term, my noise could be someone's trend and what I consider as trend might be just noise to another longer term trader. Generally, the longer time-frame trend is said to be dominant, but again this is a mattter of perception. One has to define a trend according to the time frame that one is using for trading. If you are using a 15 min chart to trade, looking at a daily chart to define trend is useless. In this case you look at a hourly chart to get an idea about the dominant trend. Again, it is all relative to one's trading.

[fairwind]

Do a search for "trend" in 'Titles' only, of the 'General' pages and get this lot to read:

http://www.moneytec.com/forums/searc...searchid=80731

That will keep you busy for the rest of the day...........

[ampris2000]

the trading method i use trends can be noticed in any time frame.
an example, i noticed on the 3 hour chart a previous trend that is currently sideways. There was a long bearish candlestick which I would not have traded by my system.
But when I looked on the 30 minute chart that one long bearish candlestick on the 3 hour was a downtrend on the 30 minute chart.

i think one book defined a trend as when prices are making higher lows (uptrend) and a downtrend is when prices are making lower highs.

How can you tell when a trend is over? One is by knowing how to read candlesticks as well as utilizing various indicators. They each have a way of letting you know when a trend is possibly over. You can also zoom out and see if the trend is at the historical data for support / resistance.

[Dr. Zogg]

TraderABC,

This is probably the most intelligent and important question I’ve ever seen on a board. It is without doubt the most important question in trading.

It is also never asked and that’s the reason why 95% of traders fail at forex (equities are slightly more forgivng). They have no clue what a trend is. It appears so simple that everybody gives it glance, reckons “Oh, I get it...” and move on to years of failure. Everybody refers to “the trend” in almost every post they do, but nobody really understands it. Generally replies are “It’s a bunch of higher highs, or lower lows,” or “A trend is a sustained movement in price in a direction over a period of time.” And so forth…All that describes are aspects of the trend.

Sure, there are higher highs in a trend, sure there are sustained price movement in a trend, but they do not define a trend by a long shot. If they did we’d all know exactly when a trend changes. By definition if you know where a trend is, you know when it changes. A trend is much more complex than those simplistic definitions. Understanding them is the key to forex and all markets.

Unfortunately my experiences have thought me that I’m likely to be called a moron and other worse things for understanding my craft. Generally when I try to explain things to people it doesn’t fit “their experience” of forex, but when they can’t argue their position, because it’s not based on facts, they resort to the time honoured defence of the idiot, which is aggression. I don’t feel like the abuse anymore, so I’ll lurk and help out from time to time, but you’ll do well to explore your question very, very thoroughly.

I’ve tried to explain trends to people before, so I still have the images. Here’s a strong starting point for you.

Is the following an up-trend, down-trend or no-trend? And justify your view…

[fairwind]

The only info in your pic is the price and price patterns, so a conclusion (if any) has to be drawn from that. The LH side of the High has been uptrend, based on HH's and LL's. That is true for the time shown.

The RH side of the High "suggests" a reversal to downtrend but without further data I cant "... justify your view ...". There is pattern of Head and Shoulder, if we accept the 'highs' on either side of the High. This pattern usually means down trend for the next period, what ever that is.
Some folk here claim to trade without indicators, perhaps they will make an offering ??

[TraderABC]

Thank you very much for your kind words.

Originally Posted by Dr. Zogg

TraderABC,

This is probably the most intelligent and important question I’ve ever seen on a board. It is without doubt the most important question in trading.

It is also never asked and that’s the reason why 95% of traders fail at forex (equities are slightly more forgivng). They have no clue what a trend is. It appears so simple that everybody gives it glance, reckons “Oh, I get it...” and move on to years of failure. Everybody refers to “the trend” in almost every post they do, but nobody really understands it. Generally replies are “It’s a bunch of higher highs, or lower lows,” or “A trend is a sustained movement in price in a direction over a period of time.” And so forth…All that describes are aspects of the trend.

Exactly, subjective aspects of a trend. Some people may be comfortable with less candles, some with more. Some just look at close, some take OHLC into consideration, some don't consider anything below 1hr to be meaningful etc.

Sure, there are higher highs in a trend, sure there are sustained price movement in a trend, but they do not define a trend by a long shot. If they did we’d all know exactly when a trend changes. By definition if you know where a trend is, you know when it changes. A trend is much more complex than those simplistic definitions. Understanding them is the key to forex and all markets.

Unfortunately my experiences have thought me that I’m likely to be called a moron and other worse things for understanding my craft. Generally when I try to explain things to people it doesn’t fit “their experience” of forex, but when they can’t argue their position, because it’s not based on facts, they resort to the time honoured defence of the idiot, which is aggression. I don’t feel like the abuse anymore, so I’ll lurk and help out from time to time, but you’ll do well to explore your question very, very thoroughly.

I’ve tried to explain trends to people before, so I still have the images. Here’s a strong starting point for you.

Is the following an up-trend, down-trend or no-trend? And justify your view…

I see where it is going. That pattern fits Up trend (chart is generally moving from bottom left to top right). Also if that picture is a PART (and how many bars should a picture contain not to be imperfect, IF there is such a number) it can also mean SIDEWAYS trend, and it can be tiny part of a big down trend zoomed in. An uptrend on 1 minutes can be a downtrend on daily's... That is the big problem 10 different ellioticians can find 10 different elliot wave in the same darn mess!!!

[Dr. Zogg]

Yet,

If you asked last year Jun/Jul what the Eur/Usd trend was everybody would have said up...a blind man could see that. So can there really be more than one trend going at any time?

You do realise the person that works out what a trend is and defines it mathematically will be the first trillionare in the world?

Edit:

Or put another way. Can there be any debate that between Jan 2002 and Jan 2005 the trend was up. It sarted at .08580 and the reached 1.3667 in 2005?