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ways to determine trend change

WHEN TO GET IN - WHEN TO GET OUT -TREND CHANGE SIGNAL

There are probably as many ways to determine trend change as there are traders! In this day of computers, the fancy math boys have really beaten the numbers up to develop a trend change mechanism. In a very large way trend change is a moot point, as it just tells us what has transpired with no assurance it will continue in the future.

MY CENTRAL THESIS ” Here it is, conditions cause major up and down moves, trend change. Without the conditions being present, trend change has little validity. Back a trend change with conditions and you get rip roaring bull/bear markets.

1 would like to think you now understand some of these conditions, such as the commercials. Let me add to your arsenal a trend change tool. The tool illustrated in the following charts is a simple 18-day moving average of closing price, that's it, nothing fancy here.

Let's look at the Australian Share Price Index. Last year at my Real Time Trading Million Dollar Challenge Seminar in Sydney I traded the SPI for the very first time. And I have to say that I quite like it - how could you not like a market that makes you money when you trade I front people and they see how you trade and share some of the profits!! Next April I hope some of the more famous Trader/Teachers/experts in the SPI will take up my Challenge lo them lo join me trading the SPI when I put up USS 1 million and trade it again!!

The dots on the chart appear when there have been two days totally above the average for a buy and two days totally below the average for sells. This is the set up for the change. Then some select short-term buy/sell signals can be used for your entry. 1 teach many of these at the Inner Circle Workshops coming up in Australia in April 2002 (see www.adest.com.au for details), but as you can see, there is power to these points.

For examples, I have taken two big trend markets - the up move in Sugar and the down move in Lumber, as well as a choppy ones. Wheat. There really isn't much lo learn here, other than a mere crossing above the moving average on one day, or touching it with no further extension of the move is not enough to bring about trend change.

As I see it, moving averages act as support and resistance. What's needed to bring about a long term trend change is for a power house move to follow on a short term basis, once prices gets into the area of the average.

It should go without saying, but there are so many technicians out there Id better say ” do not take these signals on their own. These signals are just a sign, a symptom of what matters, the underlying bullish/bearish fundamental condition.

Your homework is to get some old chart books or fire up your computer to study this relationship of price, the 18-day average and trend change. This moving average is in all the chart books and software so you have no excuses.

Bibliography

Williams, L, Long Time Secrets to Short Term Trading

Williams L, How I Made a Million Dollars Last Year Trading Commodities

(All are available from www.adest.com.au or www.invcst-slorc.com/adcsi)

Trader, author, teacher and adventurer Larry Williams turned US$10,000 into USS 1 million in one year lo win the Robbins World Trading Cup.