1. Hello Guest Click here to check FX Binary Point Financial Directory

Moving Averages May Tell You the Strength of Trend

Discussion in 'Education, Tutorials & Courses' started by Lily, Aug 30, 2015.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
    Likes Received:
    Since we know that "the trend is your friend" we want to ask: how strong should a trend be for one to trade it? This is asuming that we can already identify the trend. So we want to determine how strong the trend is so how do we determine trend strength?

    I have one simple technique; I use two moving averages. When they converge or seem to be going parellel then the trend is weakening. When they diverge then the trend is gaining more momentum.

    I also consider the classic definitions of uptrend and downtrend:higher highs/higher lows and lower lows/lower highs. So when in an uptrend the higher lows stop going higher and approach the previous low or the higher high hangs around the previous high without exceeding it significantly; the trend may be slowing down. Similarly if in a downtrend a new low does not exceed the previous low, or the new high approaches the previous high instead of peaking below it, then the downward move may be slowing down.

    As for the ADX it simply lags too much for my liking.

    This is the much I have to share on this. Please let met get some of your thougts. I would like to learn other ways of determining trend strength.


Share This Page