How to detect trends early

Stocks trend from time to time. In order to catch a larger swing move early detection of trend helps. As a swing trader also detecting trend is useful. I primarily look for a confirmed uptrend and then buy a second or third leg of that trend after a consolidation or pullback.

There are many ways to detect trends and some can lead to lot of false moves and whipsaw while some are better at detecting trends.

Besides trend detection as a trader you are also interested in identifying explosive trend and not just a slow moving trend. Explosive trends is where big opportunity to make money in short amount of time is.

Let us look at SSRI a silver stock that has recently established a trend.

Using Stockbee Double Trouble Indicator

The stock showed up on scan this week. The longer term trend detector sacrifices part of the move to avoid whipsaw. But once a trend is detected it tends to be explosive trend.

Using Sockbee Trend Intensity 65 days

The Stockbee Trend Intensity scan detected this trend much earlier. Early detection can be more useful for position traders as it allows you to get in to position early. It also allows you to hold positions longer due to accumulated profit.

Using Guppy MMA

Guppy Multiple Moving Averages are 12 exponential averages used to detect trends. The 12 averages are 3, 5, 8, 10, 12, 18, 30, 35, 40, 45, 50, and 60. The 3, 5, 8, 10, 12, and 18 period exponentially moving averages are used to show the short-term trend and the 30, 35, 40, 45, 50, and 60 show the longer-term trend.

A longer term trend is established when all the 12 averages confirm the trend. As you can see the Guppy MMA detected the trend early.

There are many ways to determine trend start and trend end. If you use a very sensitive indicator to detect trend you will find trends early , but you will also find many false starts.

In above example TI65 and Guppy MMA detected a trend start early , but they also gave false signal in August.

There is no one best way to find trends , but whichever way you select you need to be consistent about it and think a lot about it.

If you understand trends and how they progress you can find opportunities to capture part of the swing moves in a trend.

Methods and philosophy

Best site to learn to trade

If you are serious about your trading and want to build an enduring edge, the Stockbee Member site might help you.

Members tell me they have tried a lot of things before coming to my site, and it has offered them the most extensive and detailed methods to swing and position trade. Members range from very experienced traders to novices.

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The site gives you an opportunity to interact with some of the most successful traders and learn from them about their trading methods. It is a vibrant community with members from different backgrounds and experiences willing to help each other. Members have shared their methods, scans, software, backtests, and market insights.

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You will see that many trading bloggers have been using my market timing methods, scans, and chart templates. They have developed their own methods based on my methods.

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If you are looking to develop your own trading strategy, the membership site might be for you. You have to be willing to put in the effort to build your own method. There are no silver bullets offered on the members' site. Every method, every scan, every nuance is detailed, and all possible help is offered to design your own method.

3 comments:

Unknown said...: How is the Trend Intensity 65 calculated?

Thanks!; Feb 22, 2019, 1:52:00 PM
Pradeep Bonde said...: It is calculated as ratio of 7 days moving average to 65 days moving average; Feb 22, 2019, 1:59:00 PM
SteveD said...: I've never seen a Guppy indicator as a kind of histogram in the lower panel like that- I love it! Is this available in TC2000?
Thanks.; Nov 25, 2023, 10:39:00 AM

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