Hi Baileydog,

Welcome to the Forum.

There are hundreds of trend-traders out there, and as such, there are hundreds of different ways to identify or define a trend. You have to be very specific of how YOU want to define YOUR trends for YOUR trading.

Whipsaws are a fact of life and virtually impossible to completely eliminate from trading, but there are different methods to reduce their frequency and severity. Again, each trader will have their own method. There are some built in indicators such as Aroon and the Directional Movement indicators which can help here, others such as "B and Q" can help some people, as can employing different flavours of moving averages and other smoothing techniques. Google is a great resource as there has been much written and published in the open domain.


Hope this helps.

wabbit [:D]

It's been a long while since I have played with the inner workings of these indicators, so take the following with a grain of salt, or do some more analysis of your own.... I know Roy did some in-depth work a few years ago, perhaps he will wade into the argumet and provide some more information?

The trend period setting and the noise period setting are used in moving average (or smoothing) processes in the codes. The trend period is used in an exponential moving average of the accumulator value; like all EMA lengths this will will dictate how the weighting ratio of new data to old data. The period setting is used in a SMA smoothing in the computation of the noise. The correction factor is an amplifier of the noise. If you turn the amplifier up, you need to have a much stronger signal to be able to see it above the noise.

Generally, I don't like to smooth data too soon in the computational process, I prefer to smooth only the result. There is nothing stopping you from setting both the smooting values to their minimum and applying another smoothing algotithm to the final output from each of the indicators..

The combinations of the settings has some effect on the quality of the information displayed, but the default settings are usually sufficient in most instances? You might want to do some testing to find the right settings for you in the current market conditions.


Hope this helps.

wabbit [:D]

Hi,

Wabbit mention this. Here is a link to the MetaStock Formulae.

The author is shown here and his article can be bought here.

A synopsis by the author is at

http://store.traders.com/stcov221trin.html

and you can buy the article for $2.95. I did and it is worth reading...3 pages. He just does exactly explain how to adjust the 5 indicators, 2 are the moving averages but three are a bit past my mathematical abiltiy to understand.

Anyhow, I added the indicators and plotedt in two seperate windows above the main chart. So far I like what I see. I am backtesting against the s&P 500, TSX (Canada) and EAFE basically a proxy for the mutual fund market I operate in.

I also found a need Adapative Moving Average at http://www.paritech.com/education/technical/custom/indicators/98mar.asp

I didn't do the binary wave, just the actual indicator. It works pretty neat too! I am using a very basic 50 and 200 moving average. As the markets seem to be bottoming (hopefully), my issue is that the 200 moving average is miles away from crossing a 50 day Moving average. But with the 200 day Adaptive, it's actually much closer. Anyhow that is where I am today.

I have also ordered the Adaptive Cycle Toolkit. Expensive but will give it a try and see if what they offer works.

Good luck and let me know what you discover. Are you doing longer trends as well? I am not trading stocks, only funds in Cana da...so only what long term trend and a few signals at most per year.