V.13:08 (345-347): Trending on a Historical Basis by Alex Saitta

V.13:08 (345-347): Trending on a Historical Basis by Alex Saitta
Item# \V13\C08\TRENDIN.PDF
Availability: In Stock

Product Description

V.13:08 (345-347): Trending on a Historical Basis by Alex Saitta

The question is as old as technical analysis itself: Does the market trend? Here's a method to determine the degree to which markets trend historically. In addition, there's a comparison of various markets based on the observable degree of trend.

In the pursuit of profit, most traders spend hours each day trying to forecast whether the market is about to trend upward or downward. However, some traders pursue their quest for profit in a different way. These traders are not concerned with the direction the market will move; rather, they are concerned with whether the market tends to move for a significant length of time - does the market tend to trend?

These traders use a trend-following trading method (for example, moving averages) as a way to capture market profits. Instead of having to identify whether the market is about to go up or down, however, the trend-follower must determine if the market has a tendency to trend.


Although it may seem easy to identify whether a market tends to trend, to the naked eye this can be difficult to ascertain. Take a look at the two series shown in Figure 1. One is random - that is, consecutive prices are not correlated. The other is trending - consecutive prices are correlated; that is, when the most recent price rose (or fell), the probability the price would rise (or fall) the next day was 60%. By looking at these two charts, can you tell which series is random and which one trends?

*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.

Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Traders.com Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order