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In a message dated 10/10/98 11:46:42 PM, flag@xxxxxxxxxxxx writes:
<<What's the best way for a mechanical system to detect if it's market is in a
trend, and, if so, which way that trend is headed? Adx? Moving Average
Slope? Linear Regression? or What?
Clint
>>
Out of all the choices listed, I like "or what". ADX measures the strength
of some trends but not all. Moving average slope is wrong because it tells
you that there is always a trend. Linear regression tells you what the trend
was in the past but not what it is now.
Sorry for making light of a serious question. There are many answers to your
question but I always like to look for the simplest solution to a problem. If
you just want to know the direction of a trend simply compare the recent price
with the price x bars ago and then you can say the x bar trend is up or down.
Trend identification needs a time frame to reference and this simple method
gives you both the time frame and the direction of the trend. It even tells
you something about the strength of the trend. For example: we are six points
higher than four bars ago. This simple statement contains the direction, the
time frame and an indication of trend strength.
Chuck LeBeau
http://traderclub.com/
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