Objective ways to define a trend day before the trend has run its course??

[Adamned 10]

Recently a light bulb has turned on in my head. The second most important thing in intra-day trading the stock indexes is knowing what type of strategy to employ. Either a range strategy or a trend strategy. The first most important thing is of course risk management which addresses the crucial aspect of stops and position sizing.

 

I would greatly appreciate some creative ideas which would help all the great people on this forum trade a little better. The objective is to help determine which strategy is the correct strategy to employ on any given day.

 

In hindsight its very easy to determine which was the correct strategy but in live trading its a totally different story. After deep thought and long back testing I have found it makes an enormous difference if I use only a trend strategy on trend days and a range strategy on range days. Now the problem is actually achieving such a great feat.

 

I like some of the ideas from tony crabel for assisting in this area such as NR4 and NR7. If you are not familiar with his book its basically just when you have an inside day expect a persistent trend when the high or low of the inside day is breached by a predetermined spread. This is a good tool to have in ones arsenal but its not enough. Many trend days occur with out a previous narrow range. I have read the indicators such as ADX and volatility indicator (not implied or historic) can help in this area. I don't particularly like indicators but if some one has had good experiences with indicators for this purpose i would love to hear about it. Thanks for the help and good trading to all.

[MC 10]

I just had a light bulb moment today...as a noob I know I should NOT be trading this type of monthly ATR. :rofl:

 

http://www.traderslaboratory.com/forums/f18/mcs-house-of-mirrors-2553.html

 

I made a lengthy post about the volatility this month has shown. Don't get me wrong, those that know how to trade are making a KILLING in this insanity. For the rest that don't have discipline or experience it's a gamble at best IMO.

[Hlm 10]

With the combination of market profile and market internals you can usually get a very good indication of the trading environment shortly after the open. Market Profile is the process of using statistics to define the previous days fair price. In general, a market that breaks out and/or finds S/R outside the value area (with market internals behind it) will trend in that direction looking for the new fair price (many times previous value areas). A market currently inside the value area will move from one side to the other until interest is found outside, usually with increasing internals in that direction. Of course this is based off a normal distribution day. In my opinion you not only need the price action (daily candle, market profile, opening range, etc) but also the market internals to make educated decisions about trading conditions.

[bertg 10]

Hlm,

 

Can you please explain what you mean by "market internals"?

 

Thank you,

Bert

[bertg 10]

Hlm,

 

Can you please explain what you mean by "market internals"?

 

Thank you,

Bert

[Hlm 10]

Hlm,

 

Can you please explain what you mean by "market internals"?

 

Thank you,

Bert

Sure, no problem.

 

Market internals are used to help show the current sentiment. Some of the more popular ones are the TRIN, A/D, and TICK.

 

Again, you don't want to use these by themselves and the exact number is not what's important. What's important is where it's coming from and at what speed. I hope that helps.

[Soultrader 12]

bertq,

 

Take a look at this video regarding TICKS I created.

[darthtrader 10]

bertq,

 

Take a look at this video regarding TICKS I created.

 

cool vid James.

Have you ever tried cummulative tick in esignal? I've been thinking about giving esignal a go just to try it out if I can't get it going in Ninja.

 

http://traderfeed.blogspot.com/2008/01/nyse-tick-and-intraday-trending.html

 

Funny Crabel was mentioned as I'm just starting to try to integrate an ORB type strategy into my trading for this very reason. I don't think its very realistic to expect to be able to predict a trend day with much accuracy before hand. I think focusing on tools that have to do with the opening range/intial balance is probly a better way to go.

The only other market generated information at hand would be how the high of the day is violated. You also have to figure different types of trend days. Yesterday was pretty trendy but more in the sense of auctioning to higher and higher balance areas. The open test reverse during the IB with really strong positive TICK was probly a good clue, but still only a clue.