One of the Best technical indicators if not the best technical indicator (in our opinion) is the trend indicator.
How can we make such a claim? Well, the answer is simple. We live in a world where fraud, deceit and manipulation are viewed as desirable traits. There is no such thing as free markets today. Only fools believe in the concept of free markets. As they say, only God create idiots, and only fools think they are Gods. In such an environment, you cannot rely on standard fundamental or technical analysis. All the data today is contaminated or manipulated. If the Feds stopped supporting the markets, they would collapse the very next day. Thus against this backdrop, the only thing that will work is if you have a way of determining the real trend.
That’s where the Trend Indicator comes in. If we had, to sum up, the trend indicator in one sentence, this is the statement we would make “a tool that magnificently combines the supreme elements of technical analysis with the most compelling elements of Mass psychology”.
Inception on one of the Best technical indicators
After 2008, market manipulation took on a whole new meaning. Anything that could be would be manipulated. With this in mind, we knew we had to have an indicator that was operated on data that could not be manipulated. Fortunately, we had already been working on such a project, and the financial crisis pushed us into high gear.
Trend indicator does not rely on data that can be manipulated
We needed and wanted an indicator that did not depend on or rely on so-called by easily manipulated critical components such as volume, market internals, the number of new highs or new lows, moving averages of new highs or new lows, advancing or declining issue and a host of other data that was being manipulated. Volume is one of the key backdrops of most technical systems. Thus, we wanted a system that would never have to rely on such indicators or any other data that could yield false signals. We wanted an indicator that focused on price action and key psychological component, but one that was also extremely accurate; the trend indicator is the answer to this problem
Thus, we wanted a system that would never have to rely on such indicators or any other data that could yield false signals. We wanted an indicator that focused on price action and key psychological component, but one that was also extremely accurate; the trend indicator is the answer to this problem
With the trend indicator, the trend is recalculated on the hourly, daily, weekly, monthly and quarterly basis. For example on a daily chart, each bar represents one day of data, and on a quarterly basis, each bar represents one-quarter’s worth of data. We use mostly price data, some key psychological data that can be quantified and a few other key components that we calculate that are free of contamination. With the inception of the trend indicator, we no longer need to focus on the following
The Trend indicator does not require data that can corrupt other indicators
- There is no reason to identify so-called critical market turning points in advance to know which direction the markets are headed in. Many services issue targets but if the target is not hit or broken, then they conveniently provide you with an alternate scenario.
- This stress factor is eliminated from the equation with the trend indicator. As we already know the trend in advance, the strategy going forward is rather simple. If the trend is, up, all pullbacks are viewed as buying opportunities and vice versa
- There is no need to sift through meaningless data such as market internals, market volume, advancing and declining issues, Baltic Dry Index, Copper, and a host of other useless data. Once upon a time, this information was useful and in some cases the key to determining market tops or bottoms; today most of these indicators are on par with toilet paper.
Predict Market Tops and Bottoms in advance and with little to no stress
Imagine never having to worry about what the market is doing. It would be priceless to know in advance if the market was topping or bottoming. Envision knowing in advance that the so-called sharp correction the market is experiencing represents nothing more than a buying opportunity. It is not the end of the world as the Talking heads at CNBC or other self-proclaimed markets gurus proclaim. Well, you do not have to visualise this anymore; there is such an indicator, and it does what it says.
However, please do not mistake market topping and bottoming with predicting the exact top or bottom. We are not going to insult your intelligence by stating we have such a tool. What we have is a tool that is highly accurate in determining whether a market is going to top, bottom or continue trending upwards. With this knowledge in hand, you have the power to plan your moves in advance. Fear and stress become relics of the past.
Why is the trend indicator on one of the Best Technical indicators of all time
Once the distraction of trying to figure out where the market is headed is removed from the equation. One can focus on the most important job of spotting the best plays poised to benefit from the current trend. Even if the data were not manipulated, knowing the trend in advance is simply priceless. Imagine how much more time you have on your hands to focus on trying to find the strongest plays to take advantage of the current trend. How much less stress you have to go through. If you knew in advance that the current downward move was just a pullback and not the beginning of a crash. You would react in a different manner as opposed to moving into panic mode and blindly looking for direction.
With this knowledge, you would know in advance what strategy to employ. No longer would you be backed in the corner like a caged animal looking desperately for an exit. Instead, you would be calm, confidence and ready to act as you would have planned your moves in advance. Time would be one your side and not against you. The trend indicator has been back tested with 50 years worth of data, and in each case, it came out with flying colours; In every instance, it identified when a market was going to top or bottom. In some instances, it was a bit too early, but we feel that it’s better to be early than late. Again, we are speaking of spotting a trend change, which means you might have to get in and out a bit early.
We examine the Trend over several timelines (daily, weekly, monthly, Quarterly, etc). The ones we dedicate most of our attention to are the weekly and the monthly trends. The hourly timelines are for short term trend players such as day traders.
Our trend indicator does not focus on the Drawing of Trendlines. Instead, we recalculate the trend for each time frame (hourly, daily, weekly, monthly and quarterly). This information is then combined with critical psychological data. The Trend indicator is not reliant on volume, market internals, and any other data that could be potentially manipulated. In fact, we have ceased to look at the volume or market internals, advancing or declining issues since we started to use this indicator, and the results are nothing short of remarkable. Look at some of our recent calls here.
Benefits of using one of the Best technical indicators out there
Knowing the trend provides us with ample time to find the stocks that will perform optimally under the present market conditions. This enables time to offer stock trades in several categories for free; most Financial services will charge for these extra features, that the Tactical Investors provides for free. In many instances, these fees are double the cost of our entire service. With us, you get all this and more.
In each instance, we can fine tune the selection process by utilising the trend indicator and several of our other top rated tools. The section titled “Tactical Investor Tools” provides an overview of the tools we employ. Leave the market analysis to us, and spend time doing things that bring joy to your heart, instead of wasting it on things that might heighten your fear. As market direction is no longer an issue, you can sit back and enjoy the ride.
The Trend Indicator in action.
Let us look at some real time examples of the trend indicator in action. The red arrows in the charts are profit points for traders with short to medium trading time frames. We focus on the long and very long term timelines, but will always provide suggested exists for traders with shorter horizons. Concentrating on the long-term timelines does not mean we always hold a position for an extended period; in fact, we tend to hold onto positions for less than six months.
We use long-term time lines to base our entry and exit points on; in other words, the analysis is based on applying the trend indicator to weekly and monthly charts. Blue arrows indicate buy signals based on the trend indicator and red arrows indicate sell signals based on the trend indicator. As you will see from the numerous examples we have provided below; we are not looking to spot the ultimate bottom or top. In most cases, the signal turned bullish before a bottom was in place and bearish before a top was in place.
There is a saying in Wall Street that; “Bears win sometimes, and Bulls win sometimes, but pigs are always killed”. The point we are trying to make here is that our goal is not to spot tops or bottoms or fixate on trend lines and worry about when the stock might or might not top or bottom. Our goal is to enjoy the ride up and or down until the signal changes, and that is it. With this strategy in place, it makes investing an extremely pleasurable venture.
We will start off with FXI (iShares FTSE/Xinhua China 25 Index), one of the much larger ETFs. Even with this large ETF, you can see the how beautifully and seamlessly the trend indicator works.
If you were following the principles of trend line investing you would have waited for SOHU to break out above the black downtrend line (breakout point indicated by the green arrow). However, the trend indicator turned bullish almost three years earlier and along the way generated additional buy signals, as shown by the blue arrows. The trend indicator allows you to lock in significantly larger profits, while at the same time focussing on the real trend at hand, as opposed to trading based on news or wrong perceptions.
You would have been able to open a position in 2011 at around 32. Instead of waiting untill 2014 to get in at around 39.00-40.00. Additionally, you would have been able to add to your position along the way as indicated by the additional blue arrows. Short-term traders would have been able to bank profits as noted by the Red Arrows. Moreover, they could re-open new positions based on the blue arrows. On every occasion, we neither managed to get in at the exact bottom or out at the exact top. This never was and never will be our strategy. Large ETF’s and Large stocks due to their size cannot deliver the same gains as smaller cap stocks. If you had opened positions in strong stocks such as CHL, NTES, SOHU, etc., the gains would be significantly larger. Let’s take a look at SOHU and NTES
You would have been able to open your first position in SOHU in early 2012 & continuously add to it till 2015. Along the way, you would have taken profits as indicated by the red arrows. If you were following trend line investments protocols, you would still be waiting to get in. Notice again; we almost never managed to get in at the bottom or out towards the top; that is not the goal here. Our goal is to get in when the markets are issuing bottoming signals and get out when they are generating signs of a top. We never attempt to time the exact top. If we do happen to time the exact top, we assign that to lady luck.
NTES triggered a bullish signal towards the end of 2011. After that, You would have got in and out continuously till 2015; along the way you would have profits as indicated by the red arrows. Again, we almost never got out towards the top & vice versa. Our focus is on catching the main move and not trying squeeze every cent out. The saying penny wise pound foolish comes to mind; the trend is your friend so do not fight it.
We opened our 1st position in Nov 2014 after the trend indicator turned bullish. In Feb 2015, the trend indicator flashed another (much stronger) buy signal. Shortly after that the stock took off, and we bailed out around 6.30; while we managed to get out close to the top, this was more luck than planning. Our goal is to open a position when the market starts to give indications of a bottom; this usually means we get in a bit early and vice versa. Our goal is to get in before the market takes off and out before it breaks down. We will not chase cents and give up dollars; that’s a recipe for disaster.
The trend indicator is also great for picking topping action. The Euro generated sell signals in August of 2011 and the signal was valid as of Dec 2016. In between, we only had to buy signals as indicated by the blue arrows. Future’s traders, equity players and options players had many opportunities to short this market and walk away with massive profits. We locked in handsome gains by using the same strategy on Gold. In fact, in 2011, we turned bullish on the dollar, bearish on the Euro and bearish on Gold. Our subscribers closed their positions in Precious metals with the following results
Silver = profits more than 1000%
Gold = 700% plus
Palladium = roughly 800%
Now you know why we feel this is one of the Best Technical indicators of all time
With the trend indicator, you would not have missed the biggest and most hated bull in financial history. Again, the indicator never managed to pick the exact bottom and or top. The Markets remained volatile even after we opened the first position in 2009. However, that did not deter us as we knew the trend was our friend. This indicator focuses on the long term picture, so acid is only experienced over short-term time frames. With the Trend indicator, you will never focus on what the markets are doing over the short term periods. If the Market drops lower, the idea is to buy more as long as the trend is up. This strategy has paid off handsomely and we are in no hurry to change it. The investing strategy is very simple and effective.
Looking for more, take a look at the extensive list of our Market calls.
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The Most Powerful Tool In Technical Analysis