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How to detect trends early

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Stocks trend from time to time. In order to catch a larger swing move early detection of trend helps. As a swing trader also detecting trend is useful. I primarily look for a confirmed uptrend and then buy a second or third leg of that trend after a consolidation or pullback. 

There are many ways to detect trends and some can lead to lot of false moves and whipsaw while some are better at detecting trends. 

Besides trend detection as a trader you are also interested in identifying explosive trend and not just a slow moving trend. Explosive trends is where big opportunity to make money in short amount of time is.

Let us look at SSRI a silver stock that has recently established a trend. 
Using Stockbee Double Trouble Indicator



The stock showed up on scan this week. The longer term trend detector sacrifices part of the move to avoid whipsaw. But once a trend is detected it tends to be explosive trend.

Using Sockbee Trend Intensity 65 days


The Stockbee Trend Intensity scan detected this trend much earlier. Early detection can be more useful for position traders as it allows you to get in to position early. It also allows you to hold positions longer due to accumulated profit. 





Using Guppy MMA


Guppy Multiple Moving Averages are 12 exponential averages used to detect trends. The 12 averages are 3, 5, 8, 10, 12, 18, 30, 35, 40, 45, 50, and 60. The 3, 5, 8, 10, 12, and 18 period exponentially moving averages are used to show the short-term trend and the 30, 35, 40, 45, 50, and 60 show the longer-term trend.

A longer term trend is established when all the 12 averages confirm the trend. As you can see the Guppy MMA detected the trend early.



There are many ways to determine trend start and trend end. If you use a very sensitive indicator to detect trend you will find trends early , but you will also find many false starts.

In above example TI65 and Guppy MMA detected a trend start early , but they also gave false signal in August.

There is no one best way to find trends , but whichever way you select you need to be consistent about it and think a lot about it.

If you understand trends and how they progress you can find opportunities to capture part of the swing moves in a trend.

www.stockbee.biz

If you are serious about your trading and want to build an enduring edge the Stockbee Member site might be for you. One of the most recommended site for learning to trade. 2200 members and growing everyday…

www.stockbee.biz


Source: http://stockbee.blogspot.com/2014/02/how-to-detect-trends-early.html


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