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RT’s,
Defining trend would seem to me to be one of the most important things to
be able do for traders. I have personally written upwards of 200 indicators
in my own effort to define trending. I would like to propose that this
group combine it’s best thinking to come up with a really good definition
for trend. I will start by suggesting an oldy but a goody. Most everyone
has access to the ADX in their analysis software. The ADX is a pretty good
trend indicator but it seems to lag when a market moves down strongly. I
used it to make an indicator that can be used to compare the trending
characteristics of various markets. This is the formula for Omega Easy
Language:
(Cum(Iff(ADX(10)>=21 and ADX(2)>ADX(2)[1],1,0))/CurrentBar)
It works like this; if the ADX(length=10) is greater then or equal to 21
and the ADX(length=2) is greater then the ADX(length=2) of one day ago,
then count 1, if not count 0. Then cumulate all of the counts and divide
them by the total number of bars(days). This should result in a ratio of
the number of days that the market was trending compared to the total
number of days(bars). With this percentage you can compare different
markets to see which is trending the most.
Of course this may not be the best way to measure and compare trends. But
it is fair. If you know of better please tell us.
Best regards,
Brent
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