Market conditions and the right trading strategies - Trading-Lab

newbie · #1 11-26-2007, 08:26 PM

financial markets conditions are constantly changing and evolving. What's the best way to determine how to switch, for example, from a trend following strategy to a range-bound one? What about detecting when a trend is about to end and reverse? Are there any special technical indicators to spot this?

Leth · #2 11-26-2007, 11:10 PM

correct....the only thing in life that changes is change.

1. the best way to trade ranges is to not trade.

2. its impossible to know when a trend or a range is going to begin or end. picking tops and bottoms are not conducive to trend-following.

3. technical indicators are not conducive to trend following.

to save alot of headache, its important to choose one method (including rules) of trading and to stick with it instead of "switching". overcomplicating will definately hurt your probability of profitablility.
diversification of your portfolio will help you during ranges. for example...you can choose 20 of the 30 dow stocks (each from a different sector).
while some will range..others will trend. all you have to do is cut losses and ride winners long or short (trend followers are not bias). see answer 1 above.

this is not advice

ManhattanTrader · #3 11-27-2007, 03:14 PM

what you are asking is easier said than done. being able to determine when markets are about to change would be the ultimate holy grail. unfortunately, we can't predict that. we can only adapt.

best thing would be to stick to a trading strategy that works for you and apply strict money management rules to get over drawdowns.

ChaosTheory · #4 11-28-2007, 02:49 PM

I know a few long term trend following traders who use index filters. Their systems basically don't get into new positions if the index is in a downtrend. Anyone here trading long term trends?

newbie · #5 11-29-2007, 02:01 PM

what would be an index filter?

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#1 11-26-2007, 08:26 PM
newbie Member Join Date: Oct 2007 Posts: 45	Market conditions and the right trading strategies financial markets conditions are constantly changing and evolving. What's the best way to determine how to switch, for example, from a trend following strategy to a range-bound one? What about detecting when a trend is about to end and reverse? Are there any special technical indicators to spot this?

#2 11-26-2007, 11:10 PM
Leth Super Moderator Join Date: Oct 2007 Posts: 621	correct....the only thing in life that changes is change. 1. the best way to trade ranges is to not trade. 2. its impossible to know when a trend or a range is going to begin or end. picking tops and bottoms are not conducive to trend-following. 3. technical indicators are not conducive to trend following. to save alot of headache, its important to choose one method (including rules) of trading and to stick with it instead of "switching". overcomplicating will definately hurt your probability of profitablility. diversification of your portfolio will help you during ranges. for example...you can choose 20 of the 30 dow stocks (each from a different sector). while some will range..others will trend. all you have to do is cut losses and ride winners long or short (trend followers are not bias). see answer 1 above. this is not advice __________________ Nothing is more difficult than the art of maneuvering for advantageous positions. - Sun-Tzu Trade with the trend, Ride winners, Cut losers, Keep bets small, Use Stops - Old School Last edited by Leth : 11-28-2007 at 04:27 PM.

#3 11-27-2007, 03:14 PM
ManhattanTrader Member Join Date: Jun 2007 Posts: 45	what you are asking is easier said than done. being able to determine when markets are about to change would be the ultimate holy grail. unfortunately, we can't predict that. we can only adapt. best thing would be to stick to a trading strategy that works for you and apply strict money management rules to get over drawdowns.

#4 11-28-2007, 02:49 PM
ChaosTheory Member Join Date: Jul 2007 Posts: 44	I know a few long term trend following traders who use index filters. Their systems basically don't get into new positions if the index is in a downtrend. Anyone here trading long term trends?

#5 11-29-2007, 02:01 PM
newbie Member Join Date: Oct 2007 Posts: 45	what would be an index filter?