Determining the Trend – Technical Analysis 2

Featuring Dave Floyd

Dave Floyd’s new six-part series on Technical Analysis aims to give you the tools to become a more effective trader, using technical analysis as part of a multi-dimensional approach. In episode two, Dave addresses the crucial issue of determining the trend, which he considers to be the most important part of any trading game plan. Often misinterpreted, correctly determining the trend will bring you into harmony with the next trade you place.

Published on
9 January, 2017
Topic
Technical Analysis, Trading
Duration
14 minutes
Asset class
Bonds/Rates/Credit, Commodities, Currencies, Equities
Rating
24

Comments

  • CS

    Chris S.

    2 2 2017 19:22

    0       0

    I have always been sceptical about trend following as I struggle to believe that looking in the rear view mirror gives any information about the future. At least I don’t seem to be good at it. I felt that by the time one recognises a trend, it’s probably to late to get on the train – at least most of the time. But then this quote from David Harding changed my perspective: "If you put in stops and run your profits and trade randomly you make money; and if you put in targets and no stops, and you trade randomly you lose money. So the old saw about cutting losses and running profits has some truth to it." How I understand it, he is basicly saying that the entry doesn’t matter that much, what matters is managing the risk of your positions. To me that makes a lot of sense. But it feels like it is contradicting Dave’s philosophy of staying on the sideline if there is no trend, which seems to be much easier to say with hindsight. I would love to hear Dave’s view on this and also to see DH on RV or have Dave and DH discuss their philosophies.

  • DF

    Dave F.

    31 1 2017 22:02

    0       0

    Chandrasekaran, thanks for the question.

    Naturally a steeper slope suggests a stronger trend, but I would not get too hung up on the degree of the slope.

  • CC

    Chandrasekaran C.

    22 1 2017 19:49

    0       0

    Good presentation. Do you recommend any particular period for slopes? 10 period slope or 20 period slope or some other period? Thanks!

  • DH

    Dale H.

    19 1 2017 07:30

    0       0

    Thanks Dave. Good info. looking forward to them all. Boy that snow is deep too.

  • ca

    cyavash a.

    16 1 2017 14:48

    0       0

    Thanks for following up, Dave

  • SS

    Steven S.

    16 1 2017 08:09

    0       0

    I've been learning how to trade stocks on the internet for 10 years. Thanks to Dave I'm adding the 20/21 MA slope to my trend diagnosis. Thanks!

  • DF

    Dave F.

    16 1 2017 01:50

    0       0

    Thanks Paul K

  • DF

    Dave F.

    16 1 2017 01:50

    1       0

    Hi Cyavash,

    Trend changes when the slope of the moving average changes....not always that simple, but usually pretty effective way to gauge it. At the very least you might stops getting long or short when the slope changes.

    It you want something that tells you when 'exactly' the trend changes make sure you plan to look for a VERY long time.

    Trading is a game of best estimates and years of experience.

  • PK

    Paul K.

    16 1 2017 01:20

    3       0

    Hi Dave, as someone who contributes to RVTV, this is my favorite series.

  • ca

    cyavash a.

    15 1 2017 20:30

    0       0

    Disappointed there is no discussion about a manner in which to determine whether the trend is changing. For example, the 2011 "down trend" could have been also consolidating, as the slope was flat-ish toward the end of the range.

    I'm just skeptical of the entire concept of determining the trend from the moving average since by their nature cannot be forward looking.

  • CL

    Chewy L.

    15 1 2017 16:19

    0       0

    Good stuff Dave. How long does it normally take you to do and prepare one of these videos? I am sure some will take longer but just curious how long it took for this one. Thanks

  • CV

    Cesar V.

    14 1 2017 20:59

    0       0

    Good stuff Dave. Thank you for the wonderful info. In terms of following the trend, is a price that crosses the 20/21 MA back and forth the only indicator that you use to determine that one should stop trading? My reason for asking is that currently I am seeing a trend in the stock market where prices keep going up and up but the volume is low. I am trying to figure out if I should just stay out of the market until I see some type of correction. Things just seem too expensive for me right now, but how long can prices continue to go up?

  • NA

    Nickle A.

    14 1 2017 09:11

    1       0

    Excellent. Prof. Dave, you've found your calling.

  • KE

    Kenan E.

    13 1 2017 11:53

    0       0

    Hey Dave - sorry if I did sound too negative. (I did not mean to) I think the video is very good -- but as Matt S. mentioned compared to the level RVTV is providing elsewhere the intoductory level of your video was a little surprising. I am not a professional trader but I did read a lot on TA and I would love it if you could go give us much more details.

    I know that the production of those videos is A LOT of work and I appreciate it. So I will take whatever you give us.

    I am definitely looking forward to the upcoming videos!

  • MS

    Matt S.

    12 1 2017 17:09

    1       0

    I would have liked a bit more depth even though I agree with the KISS principle. It seems odd to have such an introductory level look at TA alongside some normal RV videos which are 90% indecipherable to most of us retail level traders.

    A difficult balance.

  • HS

    Hugo S.

    12 1 2017 15:41

    1       0

    Thanks for that. It is easy to follow your teaching style

  • DF

    Dave F.

    12 1 2017 15:14

    1       0

    Hi Niels....you are correct. Easy in concept; more difficult in the heat of battle - like most things in the market.

    But as I said, if you can get really good at identifying the trend and how it relates to lower/higher time frames it will give you an edge.

    An edge is all we can ask - there are no solutions per se.

    Trading is like a big chess game - lots of moving pieces and thinking ahead is required.

  • KA

    Kelly A.

    12 1 2017 13:03

    1       0

    Very helpful! Especially paying attention to timeframes. And, not thinking a small/short shift is going to be a bigger trend.

  • SF

    Steffen F.

    12 1 2017 10:30

    1       0

    Good video about trends. Must say though, that you make it sound easier than it is. Your example with the Dxy in 2016 - it made many "break-aways" from MA21 on daily charts, but a trend didn't start. So the big Q is to determine WHEN a new trend starts.

  • JM

    James M.

    11 1 2017 19:16

    4       1

    I disagree with comment regarding length of tutorials. Quick precise points and lessons are far easier to digest than longer more detailed lessons. I think DF is targeting the elementary steps prior to more in depth analysis which is good IMO regardless of your experience.

  • AM

    Alexander M.

    11 1 2017 03:54

    0       0

    This is great, thanks Dave. Look forward to the next episode

  • DF

    Dave F.

    11 1 2017 01:52

    2       0

    Thomas R.

    My pleasure - all part of adding value to the content.

    I am of the belief that gold is re-establishing the uptrend after the Wave ii correction off the July 7th highs.

    I still want to see some higher levels to increase my conviction, but that is the thesis I am working with presently.

  • TR

    Thomas R.

    11 1 2017 01:25

    1       0

    Dave - you are clearly one of the best at providing interaction in this comment section. Thank you. My question is, has gold, in your opinion, established an uptrend since mid-December - at least to the 1210 to 1250 range? Thanks again.

  • DF

    Dave F.

    10 1 2017 16:59

    7       0

    Hi Kenan - sorry it did not measure up for you. However, my philosophy is that less is more. Traders often times try to make it more complicated than it needs to be.

  • DF

    Dave F.

    10 1 2017 16:56

    2       0

    Sean B - yes, daily and weekly charts would be ideal.

  • DF

    Dave F.

    10 1 2017 16:55

    5       0

    Thanks for all the positive comments.

    There are 4 more episodes to go and I will continually build upon the prior one.

    Remember, this is a journey, but my goal is to provide a solid framework from which to build.

    Yes, you do need to work at this daily or weekly, depending on your schedule, and watching prices live, not 'past examples' is how you begin to dial in your skill set.

    I/we will be doing some events in the spring that address how you continue to evolve - more info here:

    http://www.aspentrading.com/events/

  • DF

    Dave F.

    10 1 2017 16:52

    0       0

    Good morning Clark - for me there is only 1 option - MotiveWave

    http://www.motivewave.com/?af=3780006&c=ASPENPUB

  • CV

    Clark V.

    10 1 2017 16:20

    0       0

    Dave, any recommendations on an online charting service?

  • JM

    James M.

    10 1 2017 15:48

    0       0

    Thanks Dave, excellent video.

  • RD

    Roland D.

    10 1 2017 12:56

    2       0

    Great series and a natural teacher. I would love to see your technical analysis in real time though and forward looking, including position sizing, exit points and stop losses etc.

  • LS

    Leo S.

    10 1 2017 11:10

    0       0

    Great work Dave. Will try to master this.

  • IH

    Iain H.

    10 1 2017 06:46

    1       0

    Thanks Dave, clearly articulated making your points easy to follow. Cheers

  • T~

    Tshort63 ~.

    10 1 2017 03:53

    3       0

    Clear, and easy to digest. Thanks!

  • EC

    Eric C.

    10 1 2017 01:20

    4       0

    Thanks for taking the time to make this video! Could use more of these for us new investors/traders that signed up for RealvisionTV!

  • SR

    Sean R.

    10 1 2017 01:17

    4       0

    Clear, simple, and useful. Thanks Dave!

  • JC

    Joe C.

    9 1 2017 23:51

    7       0

    Great video. Stan Weinstein (and protégé Brian Shannon) have very useful filtering rules for this sort of trend following: never buy below a declining moving average, never short above a rising moving average. The trick is finding the right. combination of time frame and MA lookback period (daily charts 200 day MA, for example)

  • SB

    Sean B.

    9 1 2017 23:00

    4       0

    Dave, great job, very informative. For multi-month trades (6-12 months), do you think it's best to define the trend using daily, weekly, or monthly charts to find the 21 period MA? Thank you

  • NT

    Norman T.

    9 1 2017 21:58

    3       0

    So clear, a natural teacher

  • R

    Raymon .

    9 1 2017 19:10

    4       3

    Terrific work, pitched at right level, honestly embarrassed by some of the other comments. Well done Dave look forward to rest of series.

  • A1

    Animal 1.

    9 1 2017 17:49

    9       0

    Epic intro.

  • lD

    lance D.

    9 1 2017 17:35

    3       0

    for a moment i thought dave was gonna burst into a cliff richards xmas song lol

  • KE

    Kenan E.

    9 1 2017 17:00

    7       1

    I think the video was very good. But i really expected the videos of this series to be much longer and contain more information.

    Nevertheless a good video.

  • AC

    Aaron C.

    9 1 2017 16:47

    9       0

    Really looking forward to this series from Dave. Great way to refresh and update your thinking for an exciting 2017 in markets.

  • RM

    Raghav M.

    9 1 2017 15:39

    24       0

    Crisp, to the point. Super stuff.