Trend can mean different things to different people. Someone using 200 MA can see the current trend as bullish, where as someone using 50 or 20 MA can see it as bearish.
And then there is trend within timeframes, can be bullish on daily but bearish on 1 hr.
I have often wondered, what’s the correct way to gauge trend? Series of higher high’s does that make it a bullish trend? Is the MA at a 45 degree angle? Is the MA flat?
How do I make sure that I am with the correct set of traders who are making their decisions based on the ‘current trend’.
What is current trend?
I figured this out a while back and have used it at times as well. Was I successful with it? Some times. It’s no different to using 50 MA as a trend filter.
It has been discussed a few times at the “DIBS” forums and at the ‘Building an Equity Millipede forum as well.
No indicators are needed; we only need to know the opening price.
If current price is above open, the sentiment is bullish.
If current price is below open, the sentiment is bearish.
I do not wish to abandon 50 MA, just discussing how logical is the above to determine trend?
Let’s discuss a scenario:
A stock ABC, opened trading day at $45.00. That’s because there was equilibrium between buyers and sellers at the opening time.
The price then tends to move north, $45.10, $45.20, $45.30…. and so on, we know that buyers are accumulating stock. Simple!
Now if price was to top at $45.50, we know that as an equilibrium point between buyers and sellers. Now price drops to 45.15 and then moves to $45.25 (lets just imagine we have an engulfing bar), this would be our signal to go long as it signalled above open.
So what about trading on a daily time frame? For daily time frame, monthly open is more appropriate. Weekly can be used, but think of it as a smaller term MA. Paying attention to the monthly open is probably not a bad idea.
Cheers,
Pip.
And then there is trend within timeframes, can be bullish on daily but bearish on 1 hr.
I have often wondered, what’s the correct way to gauge trend? Series of higher high’s does that make it a bullish trend? Is the MA at a 45 degree angle? Is the MA flat?
How do I make sure that I am with the correct set of traders who are making their decisions based on the ‘current trend’.
What is current trend?
I figured this out a while back and have used it at times as well. Was I successful with it? Some times. It’s no different to using 50 MA as a trend filter.
It has been discussed a few times at the “DIBS” forums and at the ‘Building an Equity Millipede forum as well.
No indicators are needed; we only need to know the opening price.
If current price is above open, the sentiment is bullish.
If current price is below open, the sentiment is bearish.
I do not wish to abandon 50 MA, just discussing how logical is the above to determine trend?
Let’s discuss a scenario:
A stock ABC, opened trading day at $45.00. That’s because there was equilibrium between buyers and sellers at the opening time.
The price then tends to move north, $45.10, $45.20, $45.30…. and so on, we know that buyers are accumulating stock. Simple!
Now if price was to top at $45.50, we know that as an equilibrium point between buyers and sellers. Now price drops to 45.15 and then moves to $45.25 (lets just imagine we have an engulfing bar), this would be our signal to go long as it signalled above open.
So what about trading on a daily time frame? For daily time frame, monthly open is more appropriate. Weekly can be used, but think of it as a smaller term MA. Paying attention to the monthly open is probably not a bad idea.
Cheers,
Pip.