Welcome to the Traders Laboratory. Share Share this post on Digg Del. I am looking forward to seeing what you have to say. Trend Definition We need to determine trend if we want to make trend trades, there are multiple ways of determining trend, but remember we are after simplicity and optimization Let me tell you a little bit of history now, how I came to the trend definition I am about to present During this entire process I have been interacting a lot with Don, in some point Don has showed me some threads dealing with the topic "rainbow trading" if you would like to see some of this here I attach the links to this threads that deal with rainbows, one of the first developers on this aproach was GuppyMMA http: Now this rainbows are simply averages, no sofistication here, you could simply use the smallest and the largest one and get the final same output Now as I like to take things a little further I came up with something I believe outstanding First should we talk about the normal problems trend indicators suffer You're one smart dude.
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Page 1 of So far my forex research has been going thru lots of diferent process wich I decided not to make so public, in order to only share relevant and usefull information here at TL I had been interacting privately with Don on some very interesting technical issues for wich I am so greatfull I want to trade in this occasion with the trend I will not fool arround with counter trend trades, thought in futures I am addicted to them, but in this case I will only focus on the trend side What I am going to present here its nothing new I am just going to present diferent parts of analysis developed by other traders from other forums on diferent areas Then I will optimize to my taste this diferent analyisis and later put them all together in a comprehensive and simple ecuation that I will call it "Trend Trades" Let me first start with a great issue that has been taking me some great deal of time doing some thinking and coming to a sustainable conclusion: The second issue was Timeframe interestingly Brownsfan took the topic the other day and really its so important on the entire ecuation, where it marks a lot of aspects on your favor or not like: So let me go to the center of the topic here: A trend trade is a trade that takes a clear trend definition and trades the dips on an UP trend and trades the rallys on a DOWN trend What you need for a trend trade is all this: But the science here is coming to the point of having superb simplicity On the other hand Optimization has a great deal on giving a trend trader an edge over a diferent trend trader So this trend trade I am about to present here has some of this ingredients I will post soon, have to make some coffee It certainly is a hard issue that has to be dwelt and has to be "optimized" thru some new modern indicators Let me show you how this works, a normal sma has the same input thru the entire dataseries, an ema gives some more weight on last data, but the vma literally changes its inputs depending on volatilty Let me see if I can explain with some graphs here: I hope you get the idea here, because understanding this it may represent you a great change on your trading life This "horizontal performance" has the effect of bringing down noise and whipsaws in an unprecedent scale Now when we take this and create a rainbow, things start to rock On the above chart I mark with elipses the chop areas and with arrows the trending areas With a regular average on this chops you would been chopped in various pieces but with this one you are simply in one side of the rainbow Switch to Hybrid Mode.
Switch to Threaded Mode. Excellent Good Average Bad Terrible. The "Flip" Trade support and resistance changing roles. Cognitive Therapy for Traders". Transcript of feb's "Morning Breeze" setup.More...